Reuters
Gasoline Prices Sting Chain Store Sales
Tuesday March 30, 11:54 am ET
By Kevin Plumberg
NEW YORK (Reuters) - Rising gasoline prices stung U.S. retailers last week as some consumers stayed at home and chain store sales dipped despite Easter holiday shopping, reports said on Tuesday.
Sky-rocketing gasoline prices could cool the hot pace of consumer spending, especially in the summer months when demand for oil usually picks up, posing a problem for the recovery, as spending accounts for about two-thirds of overall economic activity in the United States.
Chain store sales decreased 1.9 percent in the week ended March 27 compared with a 0.2 percent rise in the previous week, the International Council of Shopping Centers and UBS said in a joint report. Sales for the week slowed to a 6.6 percent pace compared with the same week a year ago, down from the 7.1 percent growth pace of the preceding week.
"Consumers report that the high gasoline prices are having a negative impact on their frequency of shopping trips, which in-turn, affects spending," said Michael Niemira, ICSC's chief economist and director of research.
U.S. retail prices at the pump rose to a fresh record on Tuesday, with self-serve regular gasoline averaging $1.753 per gallon, up three-tenths of a cent from the prior record set on Saturday, the AAA motor club said.
The U.S. Energy Information Administration forecasted prices would rise to an average of $1.83 a gallon in April and May, indicating a weight on sales going forward if a relationship between gasoline prices and discretionary spending holds up.
A separate report, however, showed sales at U.S. chain stores picked up compared with last year, spurred by Easter holiday-related shopping.
Redbook, an independent research company, said the pace of sales at major retailers increased by 6.9 percent on a year-over-year basis for the week ended March 27, up slightly from the preceding week's 6.3 percent pace.
Despite the strong year-over-year sales results, worries over the outlook for consumer spending persist.
"In the coming weeks, retailers are hoping that extra cash from income tax refunds and mortgage refinancing will spark sales, while some worried about rising oil prices and slow growth in the labor market stalling consumer spending," the Redbook report said.
The AAA said the state with the highest price of gas was California at $2.13 a gallon, and the lowest average was shown in South Carolina at $1.62 a gallon. (Additional reporting by Bernard Woodall) |
