US retail sales increased 0.5% in April to $757.1 billion, matching market expectations and signaling continued consumer resilience, even as inflation pressures intensified across the economy. The monthly gain followed a revised 1.6% rise in March and pushed year-on-year retail sales growth to 4.9%, according to data from the Census Bureau. However, much of the increase was driven by higher gasoline prices, with gas station sales surging 2.8% amid geopolitical tensions in the Middle East. Excluding gasoline, retail sales rose just 0.3%, suggesting underlying demand remained soft.
At the same time, initial jobless claims rose by 12,000 to a seasonally adjusted 211,000 in the week ended May 9, the Labor Department reported. Continuing claims increased to 1.782 million, hinting at a slightly cooling labor market. The insured unemployment rate edged up to 1.2%.
The data came against a backdrop of rapidly accelerating inflation. The Consumer Price Index jumped 3.8% year-on-year in April, the fastest since May 2023, while the Producer Price Index surged 1.4% month-on-month—the largest gain since March 2022 and far above the 0.5% forecast. Import prices climbed 1.9% and export prices soared 3.3%, with annual export inflation hitting 8.8%, the highest since September 2022.
The surge in inflation, fueled by rising energy costs and supply chain disruptions linked to the Strait of Hormuz conflict, has complicated the Federal Reserve’s outlook. The US dollar firmed after the retail sales release, with the Dollar Index up 0.13% to 98.58, as markets reassessed the likelihood of interest rate cuts later this year. Persistent inflation could force the Fed to keep rates higher for longer, a scenario that typically dampens appetite for risk assets, including cryptocurrencies.
