Higher Gasoline Prices: Pressure on Consumers Is Building
By: If you're searching for early signs that higher gasoline prices are starting to weigh on consumer demand, you might want to look at the latest SpendingPulse report from Mastercard Advisors.
Overall, April sales trends are mixed, with some sectors showing continued year-over-year growth, while others are flat or even negative, according to the report, which tracks sales across all payment methods.
The late timing of Easter, which shifted some sales from March into April, may make intepretations a little bit murky, but there are a few datapoints that suggest high gasoline prices—which are now topping an average of $3.96 a gallon nationwide—are starting to have an impact on consumer behavior.
E-Commerce sales logged their highest single month of year-over-year growth since July 2007, jumping 19.2 percent from the year-ago period. The growth helped push the category to its highest dollar amount for any April since SpendingPulse began tracking the data.
Yes, e-commerce sales have been steadily growing. In fact, April was the category's sixth straight month of double-digit growth. However, there is reason to believe that consumers may be turning to online shopping as a way to reduce the number of trips they are making to the store to cut back on gas consumption, according to Mike Berry, director of Industry Research for SpendingPulse.
Berry has seen other signs of gasoline demand degradation as well. For example, there is less gasoline being pumped overall, but particularly on a Saturday, which tends to be the big retail shopping day of the week.
Fewer miles being driven also is beginning to reduce demand for auto parts and services. Berry expects to see more of that if gas prices continue to climb.
Consumers also may be reigning in big-ticket purchases. Sales of electronics and appliances declined 1.8 percent from April 2010.
Lastly, while restaurant sales are still holiding up, growth has slowed at quick-service restaurants.
"Less driving equates to less eating out," Berry said, noting that was the pattern when gas prices spiked in 2008.
Still, other sectors are not only holiding up, they are continuing to show strong growth.
Total US apparel sales rose 10.4 percent in April, which is the ninth consecutive year-over-year gain for the category.
The strong gains in this category may benefited form some consumers delaying purchases of spring apparel until April, in part due to the late Easter holiday. However, even if you look at the combined March and April time period sales rose 7 percent from last year, which is a solid performance.
What's more, all of apparel's subsectors recorded year-over-year sales growth in April, including footwear, which had seen a sales decline in March.
Family apparel sales, which includes sales at clothing stores that cater to teens, rose 10.6 percent. Menswear sales rose 12.4 percent, women's wear rose 7.4 percent, and footwear climbed 6.3 percent.
Notably, the gain in women's clothing sales was the largest since May 2007.
While it's difficult to predict future sales growth, retail sales are coming up on easier year-over-year comparisons, as consumer spending weakened a little bit in May and in June of last year.
"With gas prices nibbling away at the discretionary income of consumers, it's hard to say which direction things will go from here," Berry said.
Questions? Comments? Email us at consumernation@cnbc.com. Follow Christina Cheddar Berk on Twitter @ccheddarberk.
