Retail sales rise as inflation hits three-year high, Walmart sees resilience
Consumers kept spending in April, but the gains came alongside higher gas and food costs as inflation climbed to 3.8%, the fastest pace since May 2023.
Americans kept opening their wallets in April, but the pattern of spending showed more strain than strength. U.S. retail and food services sales rose 0.5% from March to $757.1 billion and were up 4.9% from a year earlier, yet those gains were nominal, not adjusted for inflation, meaning pricier goods and fuel were doing part of the work.
At the same time, the Consumer Price Index climbed 0.6% in April and 3.8% over the past 12 months, the fastest annual pace since May 2023. Energy prices rose 3.8% in the month and accounted for more than 40% of the monthly increase in the CPI, while food prices advanced 0.5%. Groceries were not immune: food at home rose 0.7%, and food away from home increased 0.2%.
That mix helps explain why retailers tied to value spending are still finding traction. Walmart said comparable sales at its U.S. stores rose 4.5% in the first quarter of fiscal 2027, while global eCommerce sales increased 5.0%. The company said consumers remained resilient but value-seeking, and it kept its annual outlook conservative despite the strong showing.
The bigger story is who is still spending and how. Higher-income households have held up better, while lower- and middle-income shoppers have come under more pressure, cutting back on discretionary purchases and shifting more of their budgets toward groceries and other everyday essentials. That behavior can keep headline retail numbers looking healthy even as the underlying consumer becomes more cautious.
The April retail report also followed a strong March revision, underscoring how households were still absorbing price shocks even as costs built at the gas pump and in the grocery aisle. For now, the data suggest the U.S. consumer has not pulled back sharply. But the growing reliance on necessities, discounts and value-oriented retailers points to a softer mix beneath the headline spending growth, a warning sign if inflation keeps eating into real purchasing power.
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