US retail sales rose 1.2% in August to $773.9 billion, reversing July's 0.5% decline and exceeding the 0.8% gain economists had forecast, according to a Commerce Department advance estimate released Monday.
The gasoline driver
Receipts at service stations climbed 3.1% from the prior month and ran 21% above year-ago levels, reflecting pump prices that have held above $4 a gallon every day in August, a first for the month, per AAA. The headline figure is seasonally adjusted but not price-adjusted, so the increase captures both volume and cost inflation.
Broad strength
Excluding fuel, sales still advanced 1.1%, with restaurants and bars adding 1.2%. Navy Federal Credit Union chief economist Heather Long said online retailers such as Amazon are gaining as shoppers search for discounts.
The hangover
Long expects spending to decelerate later this year and into early 2027 as real incomes flatten or decline, pressuring households to pull back. The strain lands weeks before November's midterm elections, where living costs are already a flashpoint.
Context
Energy prices have surged since late February, when US and Israeli strikes on Iran prompted Tehran to restrict transit through the Strait of Hormuz, a critical artery for global oil shipments.