WASHINGTON (Reuters] – U.S. retails sales increased in March, mainly due to rising gasoline prices and higher food prices. But, Americans are starting to cut back on discretionary spending, despite high inflation.

The Commerce Department announced Thursday that retail sales increased 0.5% in February. To show that sales increased 0.8%, rather than 0.3% in February as originally reported, data for February has been revised.

Reuters polled economists to forecast that retail sales would rise 0.6%. Estimates range from a 0.3% drop to a 2.2% increase.

Last month, the bulk of sales increased due to gasoline and food. Most retail sales consist of goods. They are not adjusted to inflation. The only service category included in retail sales is restaurants and bars.

The cost of gasoline in the United States rose to new records in March, as Russia waged war on Ukraine. This was the highest monthly consumer price increase in 16-1/2 year. AAA reports that March’s pump prices reached an unprecedented $4.33/gallon mark.

Sam Bullard, senior economist at, stated that consumers will have less money to buy at other retailers if they pay higher prices for essentials like food or gas. Wells Fargo Charlotte, North Carolina (NYSE:).

Although rising inflation is reducing consumer purchasing power, the impact of high prices on wages may be offset by higher wages.

2.6% unemployment is the lowest level in two years. There were close to 11.3 million jobs available at February’s end, which was a record for that month. This made it possible for cash-strapped Americans who are looking to get a second or additional job.

A separate Labor Department report on Thursday showed that initial claims for state unemployment benefits rose 18,000 to an adjusted 185,000 week-end. This was despite tightening labor market conditions.

Forecasters had predicted that 171,000 applicants would apply for the week to come. In April 2020, claims fell to 6.137 million from an all-time high.

Some consumers are also more able to borrow because of better job security. The huge savings made during the pandemic are another buffer against inflation.