Americans tightened their wallets in April as escalating gasoline costs linked to the Iran war reduced disposable income for discretionary purchases such as apparel and home goods.
Consumer retail spending increased by 0.5% in April, representing a decline from March’s adjusted growth rate of 1.6%, based on Commerce Department figures published Thursday. March had recorded the most significant monthly retail spending surge in over three years, primarily driven by rapidly climbing fuel costs.
When gasoline purchases are removed from the calculation, April retail spending climbed 0.3%. This represents a decrease from March’s 0.7% growth rate when fuel station transactions are excluded.
Consumer activity remained lackluster across several sectors.
Department store revenues dropped 3.2%, while furniture and home decoration retailers experienced a 2% decline. Building supplies and garden equipment businesses saw minimal growth of 0.1%. However, internet-based retailers experienced a 1.1% boost and electronics and appliance outlets recorded 1.4% sales growth.
This data provides only a limited view of consumer expenditure patterns and excludes categories such as tourism and lodging. Among service industries tracked, dining establishments showed a 0.6% uptick.
The Iran conflict that started in late February has resulted in the closure of the Strait of Hormuz, eliminating one-fifth of global daily petroleum supply. Regular gasoline prices climbed again Thursday night to $4.53 per gallon. This represents a $1.35 increase compared to the same period last year, based on motor club AAA data.
Economic analysts had anticipated that increased tax refunds would stimulate consumer activity early in the year. However, surging fuel costs have consumed larger portions of American household income since the conflict began, reducing funds available for restaurant meals, clothing purchases and other discretionary items.
Despite economic disruption from the Iran war, U.S. companies continued to hire workers last month, adding an unexpectedly robust 115,000 positions.
Nevertheless, troubling inflation indicators have emerged throughout this week.
The Labor Department announced Wednesday that the U.S. producer price index — measuring inflation before reaching consumers — surged 1.4% in April, marking the largest monthly increase in over four years. One day earlier, the closely monitored consumer price index rose 3.8% compared to April 2025 — representing the most significant annual increase in more than three years. These cost increases, primarily attributed to climbing energy expenses, have affected everything from airline tickets and luggage charges to personal care products.
A more comprehensive understanding of inflation’s impact on Americans may emerge next week when major U.S. retailers including Walmart and Target publish quarterly earnings reports.
