United States retail sales recorded their strongest monthly increase in more than three years in March, driven largely by a sharp rise in fuel prices linked to the ongoing conflict in Iran.
Data released by the U.S. Commerce Department showed retail sales climbed 1.7% in March, following an upwardly revised 0.7% increase in February.
The reading marked the fastest pace of growth since early 2025 and provided the first comprehensive snapshot of consumer activity since the Iran war began.
A significant portion of the increase was concentrated in fuel spending, as higher petrol prices pushed consumers to allocate more of their budgets to energy costs.
Sales at petrol stations surged 15.5% over the month.
Excluding fuel, retail sales rose a more modest 0.6%, supported by factors including tax refunds and seasonal spending linked to warmer weather.
Despite pressure from higher energy costs, discretionary spending showed resilience. Department store sales rose 4.2%, while furniture and home furnishings stores recorded a 2.2% gain.
Online retail activity increased by 1%, and consumer electronics and appliance stores posted a 0.9% rise. Miscellaneous retailers were the only category to register a decline during the month.
The report provides only a partial view of overall consumption, as it excludes key services such as travel and accommodation.
The so-called control group, which excludes volatile categories such as autos, fuel and food services and is used in calculating gross domestic product, rose 0.7%.
Economists view this measure as a more reliable indicator of underlying consumer demand, and the increase points to broadly stable spending patterns.
However, amid early signs of strain, elevated fuel costs appear to be crowding out other forms of discretionary spending, while higher prices for goods such as electronics and appliances, partly linked to tariffs, have also contributed to increased outlays.
The surge in energy prices stems from the ongoing conflict in Iran, which began on 28 February and has disrupted global oil supply chains.
The effective closure of the Strait of Hormuz has cut off roughly one-fifth of global oil shipments, pushing U.S. petrol prices above $4 per gallon for the first time since 2022.
Rising energy costs have also fed into broader inflation pressures. Consumer prices increased 3.3% in March compared with a year earlier, while monthly inflation rose 0.9%, marking the largest increase in nearly four years.
The inflationary impact presents a challenge for the Federal Reserve, which must balance persistent price pressures against signs of weakening consumer sentiment. Surveys released earlier in April indicated that confidence among U.S. households has fallen sharply, driven largely by concerns over fuel costs and the wider economic implications of the conflict.
Higher prices are also beginning to ripple through the broader economy. Consumers are facing increased costs not only at the petrol pump but across a range of goods and services, including travel expenses such as airline baggage fees.
