March retail sales rose by 1.7% as consumer spending benefited from a combination of higher gasoline prices driven by Middle East tensions and continued support from tax refunds, suggesting stronger first-quarter growth despite inflation pressures and a cautious outlook for discretionary spending.
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Retail sales growth was the largest in a year, led by a surge in receipts at service stations as gasoline prices climbed amid the broader Middle East conflict.
Gasoline prices jumped sharplyâdata show a 24.1% rise in March, with AAA data indicating an average price increase of about $1 per gallonâcontributing to a notable spike in gas station receipts.
Beyond fuel, autos, furniture, and electronics saw gains, while food services and discretionary categories showed only modest or flat increases, signaling selective spending resilience rather than broad-based growth.
Inflation data corroborated elevated energy costs, with the Consumer Price Index up 0.9% in March and gasoline as the main driver, complicating the Federal Reserveâs policy stance.
Tax refunds provided a cushion, with the average refund up about $351 through March 27 versus 2025, and Treasury projections suggesting a roughly $1,000 higher refund than in 2024, supporting household purchasing power.
Core retailâexcluding autos, gasoline, building materials, and food servicesârose 0.7%, aligning with expectations that core consumer demand remained modest but positive while headwinds from higher energy costs persisted.