Retail sales growth slowed in April from March as higher gas cost leaves less room for nonessentials

NEW YORK (AP) — Shoppers pulled back on spending in April as higher gas prices fueled by the Iran war meant less money left over for some nonessentials like clothing and furniture.

Retail sales rose 0.5% in April, a slowdown from the revised growth level of 1.6% in March, according to Commerce Department data released Thursday. March marked the largest one-month increase in retail spending in more than three years, largely because gas prices spiked higher rapidly.

Excluding gas sales, retail sales in April were up 0.3%. That's a slowdown from the 0.7% pace, excluding business from gas stations, in March.

Elsewhere in some areas, shoppers had tepid spending.

Sales at department stores fell 3.2%, while sales at furniture and home furnishings stores slipped 2%. Business at building material and garden equipment had a modest 0.1% increase. But online retailers saw a 1.1% increase and electronics and appliance stores posted a 1.4% sales gain.

The snapshot offers only a partial look at consumer spending and doesn’t include things like travel and hotel stays. The lone services category – restaurants – registered a 0.6% increase.

The Iran war that began in late February has led to the shut down of the Strait of Hormuz, cutting off one-fifth of the world’s daily oil supply. The average price for a gallon of regular gasoline rose again overnight to $4.53 on Thursday. That’s $1.35 more than it cost a year ago, according to motor club AAA.

Economists had believed that larger tax refunds would kick start spending at the start of the year. But soaring gas prices are taking a bigger slice out of American paychecks since the start of the war, leaving less for things like dining out, new clothes or other treats.

Still, U.S. employers have so far defied the economic shock from Iran war and last month added a surprisingly strong 115,000 jobs.

But concerning data about rising prices has arrived in waves this week.

The Labor Department reported Wednesday that the U.S. producer price index — which tracks inflation before it hits consumers — shot up 1.4% in April, the biggest monthly gain in more than four years. A day before that, the closely watched consumer price index jumped 3.8% from April 2025 — the biggest year-over-year increase in more than three years. Those price hikes, again, largely do to soaring energy prices, have begun to show up in everything from plane tickets and baggage fees, to soap and toothpaste.

A clearer picture of how inflation is impacting Americans may arrive next week when major U.S. retailers like Walmart and Target begin release quarterly financial results.