Retail sales accelerate in March

Latest reading: Nominal retail sales rose 1.7% in seasonally adjusted month-on-month terms in March, following a 0.7% increase in the previous month. March's reading was the strongest since March 2024 and beat market expectations. Though sales were flattered by higher fuel prices, consumer spending was also solid across other categories, likely reflecting higher-than-normal tax refunds. Relative to the prior month's figures, readings in March improved for food and beverages (+0.7% in seasonally adjusted month-on-month terms vs -1.2% in February), general merchandise stores (+1.0% vs 0.0% in February) and gasoline stations (+15.5% vs +1.3% in February). In contrast, readings softened for motor vehicle and parts dealers (+0.5% vs +1.0% in February) and non-store retailers (+1.0% vs +1.2% in February). In annual terms, retail sales rose 4.0% in March, stable from the previous month's reading.

Panelist insight: On the outlook, TD Economics’ Ksenia Bushmeneva said: “In the near-term, higher tax refund checks – which are running about 11% higher than a year ago – and lower income taxes will likely shelter consumers. However, going forward households may pull back on some discretionary spending to offset higher gas prices and airline fares, particularly during a busy summer travel season.”

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