U.S. Retail Sales Remain Resilient Despite Higher Inflation and Gas Prices

Retail sales nationwide slowed in April from the previous month but remained healthy, showing resilience despite the surge in prices at the pump driven by the Iran war. S. economy suggest the mood is grim. Two-thirds of respondents to a recent CBS News poll reported feeling financially stressed, while a majority said soaring gasoline prices are causing hardship.

For now, however, such sentiments have yet to quash consumer spending, the critical flow of dollars that keeps the economy humming.

Walmart's latest financial results illustrate the pattern, with the world's largest retailer on Thursday reporting another quarter of strong sales growth. The company's low prices are drawing shoppers across the income spectrum who are spending more on essentials, particularly gas.

Other retailers have also recently reported strong results, including Home Depot, Target and TJ Maxx owner TJX. Higher gas prices are adding up. S. household is paying an additional $188 in fuel costs since the start of the war in late February, according to an estimate by Brown University researchers.

8 percent in April, its highest level in almost three years.

U.S. economic activity. For now, spending is holding up mostly because wealthier households are continuing to open their pocketbooks and because of temporary supports, such as larger tax refunds. Data shows that consumer spending these days is increasingly driven by higher-income earners.

Economists have termed this trend the "K-shaped economy," which refers to the divergent fortunes of wealthier consumers compared with lower-income households. In April, higher-income consumers "continued to power forward," while lower- and middle-income consumers pulled back on discretionary spending, Bank of America Institute said in a recent analysis of spending data.

The question is whether consumers can keep opening their wallets if gas prices remain elevated, and what happens if higher energy prices trickle through to other goods and services, such as groceries. Heightening the challenge for Americans is that wages failed to keep pace with inflation in April, a trend that could weaken their purchasing power if it persists.

"We will start to see some cracks appear if gas prices remain too high for too long," Neil Saunders, an analyst and managing director of retail at GlobalData, told CBS News. " IRS data shows the average refund is about 12 percent higher than last year, with the typical refund for the 2026 tax season at $3,276.

Many households are also holding up, and continuing to spend, thanks in part to larger tax refunds this spring.