Retail Sales up 0.9% in May as the weather improved and gasoline prices cooled

NEW YORK (AP) — Shoppers increased their spending in May as temperatures warmed and gasoline prices cooled.

Retail sales rose a better-than-expected 0.9%, up from a revised 0.4% gain in April, according to new Commerce Department data released Wednesday. Sales got a boost from generous government tax refunds in both April and May, though economists say that cushion is starting to fade.

Excluding sales at gas stations, retail sales in May rose 0.7%.

Sales at at clothing and accessories stores rose 0.3%, while business at home furnishing and furniture stores rose 1%. Business at electronics and appliance stores fell 0.5%. Online sales rose 1.5%.

The data released Wednesday offers only a snapshot of consumer spending and doesn’t include activities like travel and hotel stays. The lone services category – restaurants – registered a 0.1% decline.

Consumers are the engine of the American economy, driving most of the nation’s economic growth. Their spending has remained resilient so far this year despite rising prices and lackluster hiring.

Rising gas prices pushed inflation to its highest level in three years, U.S. data showed last week, with consumer prices rising 4.2% in May, compared with last year.

There is a tentative deal to end the Iran war and reopen the Strait of Hormuz, but even after oil starts flowing again from the Middle East it could take awhile for the supply crunch to ease.

Gas prices fell about a penny overnight to $4.02, down 11% from $4.51 a month ago, according to motor club AAA. The national average for a gallon of gasoline has not been below $4 since March, according to AAA.

“While the deal is encouraging, our industry is still holding its breath,” said Steve Lamar, the CEO of trade group American Apparel & Footwear Association. ”Our question now is, will this agreement be strong enough for our global industry to begin recovering?”

The spike in gas prices this year due to the Iran war may alter some behavior, peace deal or not. Analysts say

And even as gas prices come down, some analysts believe some shoppers will keep some of the habits they picked up as prices soared, like filling up the car at big box stores where they can get discounts.

Visits to gas stations operated by big box chains like BJ’s, Costco and Sam’s Club, which offer discounts to members, began to accelerate in early March, aligning with a sharp rise in fuel prices, said R.J. Hottovy, the head of analytical research at Placer.ai, which tracks people’s movements based on cellphone usage.