By Nathalie Voit

Americans are still spending despite higher prices for food, gasoline, and other essential items, new data released on April 14 from the Commerce Department showed.

Retail sales in March rose 0.5% even as inflation increased 1.2% for the month, the department said. 

Spending at gas stations accounted for a broad share of the increase. Sales in the sector rose 8.9% in March as the gasoline index rose 18.3% month-over-month, according to data from the Department of Labor. In the twelve months ending in March, gas station sales surged 37.0% as gas prices increased 48.0% year-over-year.

In contrast, online retailers saw business decline by 6.4% last month. Motor vehicle sales were also down 1.9%, the Commerce Department reported. The sales slump in both sectors was offset by gains across other kinds of businesses, including spending in general merchandise stores (+5.4%), electronics and sporting goods stores (+3.3%), and apparel stores (+2.6%). Restaurants and bars saw sales rise 1.0%.

Year-over-year, retail spending was up 6.9% from March 2021 as the Consumer Price Index jumped 8.5% over the last twelve months, its greatest increase in over 40 years, the government said. 

“While prices soared in March and eroded spending power, shoppers remained resilient, and sales were healthy,” National Retail Federation Chief Economist Jack Kleinhenz said. 

“Consumers have the willingness to spend, and their ability to do so has been supported by rapid hiring, increased wages, larger-than-usual tax refunds, and the use of credit. They are largely dealing with the shock of gas prices but will be facing higher interest rates as the Federal Reserve tightens monetary policy in the coming months. The challenge for the Fed is to cool off demand without pushing the economy into a dramatic slowdown,” he added.