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eCommerce Helps Fuel Unexpected Climb in Retail Sales

retail sales

Retail sales climbed higher than anticipated in March, fueled in part by a jump in eCommerce.

Data released Monday (April 15) by the U.S. Department of Commerce showed retail sales rising 0.7% month over month, and 4% since last year. The 0.7% figure exceeded the 0.3% forecast by Wall Street economists.

The largest area of growth during the month came from online sales, which were up 2.7% since February and 11.3% since March of 2023. Sales at “miscellaneous retailers” rose 2.1%, while an increase in fuel prices brought sales at gas stations up 2.1%.

A number of categories saw sales decline during the month: sporting goods, hobbies, musical instruments and books fell by 1.8%, clothing stores were down 1.6%, and electronics and appliances dropped 1.2%.

The report follows last week’s release of the monthly Consumer Price Index (CPI), which accelerated 0.4%, overall, in March, and 3.5% on an annual pace, faster than expected.

“While much of the discussion Wednesday, at least on Wall Street, will likely focus on the dimming prospects of interest rate cuts from the Federal Reserve, consumers are likely feeling the pinch of higher shelter costs, where that metric was up by 0.4% in March and by more than 5.7% from last year’s levels,” PYMNTS wrote at the time.

The CPI also showed an increase in food consumed away from home (i.e., restaurant sales), which is 4.2% more expensive than this time last year, far exceeding food consumed at home (that is, groceries), which showed an annual inflationary pace of 1.2%.

Meanwhile, recent earnings reports by two of the biggest banks in the U.S. noted an uptick in consumer spending. At Citi, CEO Jane Fraser reported that “healthy spend growth persists in branded cards, primarily driven by our more affluent customers. Across both portfolios, Increased demand for credit continues to drive strong growth in interest earning balances.”

And “while they’re only a small part of our portfolio, we are keeping an eye on the customers in the lower FICO band,” she added.

“We continue to see strength in the U.S. economy,” Wells Fargo CEO Charlie Scharf said during that bank’s earnings call. “Spending patterns and consumers using our debit and credit cards remain generally consistent and continue to grow year over year.”