A cashier checks out groceries at a store in Schaumburg, Illinois. (name y.huh/ap/file)
key takeaways:
- U.S. retail sales rose 0.9% in May, up from a revised 0.4% in April, as consumer spending increased, according to Commerce Department data.
- Broad-based gains, including a 1.5% rise in online sales and a 0.7% rise in the core retail control group, reflected resilient spending despite increased inflation and fuel costs.
- Economists warn the pace could slow as tax refund support wanes and higher gas prices, partly linked to the Iran conflict, weigh on consumers and business costs.
NEW YORK – Shoppers increased their spending in May by more than expected as temperatures rose and gasoline prices dropped.
Retail sales rose 0.9%, up from a revised 0.4% gain in April, according to new Commerce Department data released June 17. Generous government tax refunds boosted sales in both April and May, although economists say the cash crunch is beginning to ease.
Excluding sales at gas stations, retail sales rose 0.7% in May.
The expenditure was broad based. All shops of clothing, accessories and furniture recorded an increase in business. Online sales rose 1.5%.
There were some weak points. Electronics and appliance stores and department stores both reported slight declines.
The data released on June 17 only provides a snapshot of consumer spending and does not include activities such as travel and hotel stays. The only services category – restaurants – recorded a decline of 0.1%.
U.S. retail and food services sales were $763.7 billion in May 2026, up 0.9% from April 2026.
🛍️ https://t.co/p65hcrjkOx#CensusEconData #retail sales pic.twitter.com/GZC6GSSfvG
– US Census Bureau (@uscensusbureau) 17 June 2026
But the so-called control group – which excludes food services, autos, construction materials and gas station sales and is used to calculate economic growth – rose 0.7%. Economists said this suggests solid spending.
Consumers are the engine of the American economy, driving most of the country’s economic growth. And the latest retail sales report emphasizes that spending has remained resilient so far this year despite rising prices. Economists said the solid increase in hiring has also led to an increase in spending.
Nationwide chief economist Kathy Bostjancic writes, “The stronger-than-forecast and broader-than-forecast gain in retail sales in May suggests consumers continued to spend strongly despite higher gasoline prices in the month.” “Larger tax refunds and overall tax cuts for families this year and recent strength in employment growth helped offset the negative pressure from higher gasoline prices.”
Rising gas prices have pushed inflation to its highest level in three years, US data showed last week, with consumer prices rising 4.2% in May compared with a year earlier. On a monthly basis, prices rose 0.5% last month, after big gains of 0.6% in April and 0.9% in March.
There is a temporary agreement to end the Iran war and reopen the Strait of Hormuz, but it may take some time for the supply crisis to ease even after oil starts flowing from the Middle East again.
According to motor club AAA, gas prices dropped nearly a penny overnight to $4.02, which is 11% lower than a month ago. According to AAA, the national average for a gallon of gasoline has not been below $4 since March.
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“Although this deal is exciting, our industry is still holding its breath,” said Steve Lamar, CEO of the trade group American Apparel & Footwear Association. “Our question now is, will this agreement be strong enough for our global industry to recover?”
Lammers said unplanned costs are squeezing profit margins, leaving companies facing higher expenses for sea freight, air cargo and packaging. He said that even in the best case scenario it will take time to stabilise.
Rising gas prices this year due to the Iran war may lead to some changes in behavior, whether a peace deal or not.
Even as gas prices continue to fall, analysts say some buyers will stick to habits they adopted when prices rose, such as filling up cars at big box stores where they can get discounts.
RJ Hottovy, head of analytical research at Placer.AI, which tracks people’s movements based on cellphone use, said visits to gas stations operated by big box chains like BJ’s, Costco and Sam’s Club, which offer discounts to members, began to rise sharply in early March, corresponding with a sharp rise in fuel prices.
