February Retail Sales Rebound; Analysts See Iran War Hurting Spending Ahead

12:49 PM EDT, 04/01/2026 (MT Newswires) -- US retail sales rebounded more than expected in February, official data showed, though analysts see consumers spending less on discretionary items ahead amid higher energy prices driven by the ongoing Middle East conflict.

Sales rose 0.6% sequentially in February, following a revised 0.1% drop in the previous month, the Census Bureau reported Wednesday. The consensus was for a 0.5% increase for February, according to a Bloomberg-compiled poll. The report was delayed due to last year's US federal government shutdown.

"Overall retail sales staged an impressive rebound in February," Oxford Economics Lead Economist Nancy Vanden Houten said in remarks e-mailed to MT Newswires. "We expect the (US-Israel) war with Iran to start impacting retail sales in March, with higher personal outlays for gasoline crowding out spending on discretionary goods and services."

Energy prices have surged following the Iran war, which started at the end of February and led to the closure of the Strait of Hormuz, a critical shipping route. US retail gasoline prices averaged $4.064 per gallon Wednesday, compared with $2.984 a month ago, according to data from AAA, a travel organization that tracks fuel prices in the country.

Sales at motor vehicle and parts dealers, gasoline stations and clothing stores all rebounded month on month in February, official data showed. Spending at furniture and home furnishing stores turned negative, while sales at electronics stores slowed down.

Retail sales without the motor vehicle and gas components were up 0.4% in February, topping Wall Street's views for a 0.3% increase, according to the report.

Higher oil and gas prices could boost retail sales in March, though real spending is likely to take a hit as consumers look to reduce their spending on discretionary items, such as travel and recreation, to offset rising fuel costs, Ksenia Bushmeneva, an economist at TD Economics, said in a note.

"The (Middle East) situation remains fluid and should it persist for an extended period of time, high gas prices, continued declines in equity markets, and higher-than-expected mortgage rates -- especially during the busy spring buying season -- present downside risks to the (consumer spending) outlook," Bushmeneva wrote.

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