Gasoline prices soaring fail to curb consumer enthusiasm! US May retail sales rose 0.9% month-on-month, marking the fourth consecutive month of growth.

Data released by the US Census Bureau of the Department of Commerce on Wednesday showed that retail sales in May (not adjusted for inflation) increased by 0.9% compared to the previous month, marking the fourth consecutive month of growth. This far exceeded market expectations of 0.5%, with the previous value revised downwards from 0.5% to 0.4%. Among the 13 retail categories, 11 categories saw an increase in sales, showing a widespread recovery trend. This strong data indicates that despite gasoline prices being at their highest level in nearly four years, consumer demand in the United States remains resilient. The growth in retail sales in May was driven by multiple factors. Sales at gas stations rose significantly by 3.4%, becoming an important driving force for the overall data. This mainly reflects the impact of the increase in gasoline prices to near four-year highs due to the Iran war in May. However, even excluding sales at gas stations, retail sales still recorded a solid growth of 0.7%. Sales at automotive and parts dealers rebounded by 1.2%, marking the largest increase in nearly a year; online retail spending continued to grow for the fifth consecutive month. As the only service industry category in the retail report, sales at restaurants and bars declined slightly by 0.1% in May, after recording strong growth in April. The "control group" sales, which exclude food services, automotive dealers, building material stores, and gas stations from the core retail data, increased by 0.7% in May, higher than April's 0.5%. This indicator directly contributes to the consumer spending portion of the government's GDP calculation, showing that core consumer spending momentum remains solid. The final GDP growth rate for the first quarter of the US was 1.6%, with consumer spending, accounting for over two-thirds of the economy, growing at an annualized rate of 1.4%. The latest forecast from the Atlanta Fed's GDPNow model shows that economic growth in the second quarter is expected to rebound to 2.8%. Behind the strong spending is the large scale of tax refunds and the wealth effect brought by the stock market rise. Major retailers like Target Corporation and Walmart Inc. both mentioned that consumers are showing resilience in the face of persistently high inflation. Bank data from Bank of America Corp, JPMorgan Chase, and PNC Financial Services Group, Inc. also show continued growth in consumer spending in May. Consumer spending structure differentiation: Accelerated spending by the affluent, pressure on low-income families Although the overall data is impressive, structural concerns within consumption have begun to emerge. Bank data shows that affluent Americans are spending at a faster pace, while low-income families face tighter budgets and high borrowing costs. Recent reports also show that wages, adjusted for inflation, have declined, with personal savings rates slipping to a four-year low in April. Some retailers also emphasized that many consumers are paying more attention to value for money in their shopping decisions. All these factors indicate that consumers may struggle to maintain their current spending pace. Furthermore, with the tax filing season ending, most refund funds have been largely depleted, and the earlier additional support for consumption is fading away. Economic analysts from PNC Financial pointed out that "this year, the pace of spending of household tax refunds has been significantly faster than in past years, with gasoline expenses being a major factor". This trend is particularly pronounced among the lowest quartile of families receiving refunds - by 2026, these families have spent over 60% of their refunds, compared to just 43% in the same period last year. The latest trend in gasoline prices also poses uncertainty for future retail data. Last Sunday, the US and Iran announced an agreement to end the war and reopen the Strait of Hormuz, causing oil prices, which have been steadily rising, to start falling. This week, the national average gasoline retail price in the US dropped below $4 per gallon for the first time since April. The easing of oil price pressure will to some extent weaken the contribution of gas stations to nominal retail sales, and may also release some household spending space. "The better-than-expected performance of nominal retail sales in May, supported by the strong performance of the core contrast group in online consumption, reflects consumers actively seeking discounts and promotions. Although the report indicates that consumers still have the willingness to spend, it should be noted that this is also partly due to temporary factors such as increased tax refunds," economist Eliza Winger said. Although consumption momentum and inflation pressure persist, the latest retail data is not expected to have an immediate impact on monetary policy. The Federal Reserve is expected to maintain the benchmark interest rate in the range of 3.50% to 3.75% at its interest rate meeting later on Wednesday. This meeting is also the first interest rate decision after the appointment of new chair Kevin Wash, drawing much attention to his post-meeting statement. Despite the recent rise in inflation pressure increasing the probability of interest rate hikes, economists generally believe that there will be no policy tightening this year, citing reasons including the falling oil prices.