April 21 (UPI) — Retail sales rose by 1.7% in March mostly due to high gas prices from the ongoing conflict with Iran, the Commerce Department announced Tuesday.
It was the fastest monthly change in three years, according to a release.
In February, sales rose 0.7%.
Retail sales are seasonally adjusted but not for inflation. In March inflation rose by 0.9%, which was three times the February rate, according to the latest Consumer Price Index.
The war between the United States, Israel and Iran has caused gas prices to spike. The Strait of Hormuz, a critical transportation route for oil, has been closed to most traffic throughout the fighting. It has dramatically affected the price of gas in the United States and abroad.
Gas station sales jumped in March by 15.5% from February. Without gas station sales, retail rose 0.6% in March, which was at 0.7% in February.
Some categories were stronger. Furniture and home furnishing sales were up 2.2% in March.
Electronics and building materials held up well, too.
Gary Schlossberg, global strategist at Wells Fargo Investment Institute, said in commentary to investors on Tuesday: “Pressure on household budgets is being cushioned, for now, by sizable increases in tax refunds tied to last year’s legislation.”
Consumers adjusted their spending in other areas. Apparel sales were flat, and restaurant sales rose only 0.1%.
Gas prices likely caused that, said Dan North, Allianz Trade senior economist for North America.
“Gasoline is a thing you love to hate, because you have to buy it; there’s really no substitute,” North told CNN in an interview.
Eventually, consumers will deplete savings and tax refunds, and for lower-income Americans, it could be a struggle, North said.
“If we can wind this up, so to speak, in the next few months, the damage to the consumer and economy might not be so bad,” North said. “If you start stretching it out for months and months and toward the end of the year, then consumers and the rest of the economy get in trouble.”