Consumers, spurred by a late Easter and warmer than usual weather, pushed retail sales up by a solid amount in April although soaring gasoline prices kept the increase below expectations.
The Commerce Department reported that retail sales increased 0.5 percent in April following a 0.6 percent advance in March. The slight slowdown was seen as an indication that the big jump in gasoline prices since early March was depressing demand for other consumer products.
Wall Street analysts had been forecasting a more robust 0.8 percent advance in retail sales, a forecast that was based on reports of strong demand during the month at big nationwide retailers such as Wal-Mart Stores Inc. and Target Corp.
Analysts said the weaker-than-expected rise in April retail sales was heavily influenced by a big jump in gasoline prices, which forced consumers to spend more filing up their tanks and less at other stores.
“With fuel costs up more than 50 cents per gallon since early March, the odds would seem to favor a slowdown, albeit temporary, in consumer spending over the next month or two,” said Stephen Stanley, chief economist at RBS Greenwich Capital.
Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said that even with the “mildly disappointing” sales results in April, retail spending is still up a healthy 6.6 percent from a year ago.
The 0.5 percent rise in April retail sales was the weakest showing since a 0.8 percent drop in sales in February.
Sales this year have been heavily influenced by the weather, with January posting a huge 3 percent rise, reflecting unusually mild weather. Last month was the warmest month nationwide in more than 100 years of record-keeping and that helped spur sales of dresses, cropped pants and other spring fashions.
Overall, the economy grew at a sizzling 4.8 percent rate in the first three months of this year, the strongest showing in 2½ years and a sharp rebound from a lackluster 1.7 percent growth rate in the October-December period, a time when the economy was held back by disruptions caused by last summer’s Gulf Coast hurricanes.
Analysts believe growth will slow again in coming months as consumers deal with the impact of soaring gasoline prices, which are once again hovering around $3 per gallon, and rising interest rates.
The Federal Reserve on Wednesday pushed a key interest rate up for a 16th consecutive time over the past two years, triggering a matching increase in commercial bank rates with the prime lending rate, the benchmark for millions of consumer and business loans, climbing to a five-year high of 8 percent.
The higher borrowing costs are expected to cut into consumer demand for interest-sensitive products such as homes and autos. The Fed’s goal has been to slow the economy enough to keep inflation under control.
For April, auto sales fell by 0.4 percent following a 1 percent increase in March.
Sales at clothing specialty stores posted a 0.3 percent increase but sales at department stores were down by 0.1 percent.
The biggest advance for the month was at gasoline service stations which saw sales jump by 4.6 percent, a gain that reflected the sharp rise in gasoline prices last month.
Sales at furniture stores and hardware stores declined in April in what could be the early impacts of declining home sales, which are slowing this year as mortgage rates climb.