Consumer Spending Bounces Back 0.6% Despite Fuel Cost Surge

Key Details Retail sales climbed 0.6% in February after declining 0.1% in January, beating economist expectations. The Commerce Department reported February 2026 retail and food services reached $738.4 billion. However, rising gasoline prices threaten to derail momentum going forward. Why It Matters for Drivers Gasoline prices jumped to $4.06 per gallon on April 1, marking the first time since 2022 that prices exceeded $4. Diesel fuel has climbed even faster, directly increasing transportation costs for carriers. The Iran war, which began February 28 and closed the Strait of Hormuz, has cut off one-fifth of global oil supplies. Real Income Impact Economists warn that higher fuel prices will reduce household purchasing power by approximately $15 billion monthly, hitting lower-income families hardest. While early tax refunds initially boosted spending, those funds will dwindle by late April. Chief economist Samuel Tombs predicts minimal protection if elevated prices persist through spring. Where Consumers Are Spending Clothing and accessories stores led growth at 2%, while online retailers gained 0.7% and restaurants saw 0.4% increases. Electronics and appliance stores posted modest 0.5% gains. Despite February's positive retail numbers, analysts expect consumer caution as fuel costs squeeze household budgets.