Retail sales up 0.8% in September, but a big chunk of spending went to
paying gasoline bills
[October 16, 2026] By
ANNE D'INNOCENZIO
NEW YORK (AP) — Shoppers showed their willingness to spend in September
even after a better-than-expected splurge in August.
But a big chunk of their purchases last month went toward paying the
bills at the gas pump, according to the Commerce Department's latest
snapshot on retail sales released Thursday.
Retail sales increased 0.8% last month, after a revised 1.3% gain in
August, the Commerce Department said. Economists were anticipating a
0.3% increase for the month, according to FactSet.
Excluding business at gas stations, retail sales rose 0.2% in September.
The government figures aren’t adjusted for inflation, which accelerated
last month as gasoline and many other goods and services became more
expensive.
In fact, business at gas stations rose 6.4%, according to the Commerce
Department's report.
Elsewhere, business at furniture and home furnishings stores rose 1.3%,
while electronics and appliance stores saw a 0.6% increase. Business at
online retailers rose 0.3%, according to the report. Clothing and
accessories stores saw business unchanged from the previous month.
The data offers only a snapshot of consumer spending and doesn’t include
activities like travel and hotel stays. But the lone services category –
restaurants – registered a solid 1.1% increase.
“The large jump in headline retail sales in September was almost
entirely due to rising gasoline prices,” Michael Pearce, chief U.S.
economist at Oxford Economics, wrote in a note.
Pearce noted that consumer spending is still on track for a 3.3%
annualized gain during the third quarter, but he expects spending to
lose momentum heading into the key holiday shopping season as the drag
from higher prices weighs more heavily on consumers.
Many Americans have continued to spend despite skyrocketing gas prices
that have accompanied renewed fighting in the Middle East.
The average price for regular gasoline rose overnight to $4.33 per
gallon Thursday, according to motor club AAA. Before the war began, the
cost of gas per gallon was less than $3.
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A shopper shops at a retail store in Northbrook, Ill., Wednesday,
Oct. 14, 2026. (AP Photo/Nam Y. Huh)
 The retail sales report comes as
U.S. employers added a disappointing 29,000 jobs and the
unemployment rate ticked up last month, the government reported
earlier this month. Still, the U.S. job market has proven solid in
the face of a series of shocks, from tariffs to the Iran War.
But rising prices are still a big challenge for shoppers. The Labor
Department reported on Wednesday that the consumer price index rose
3.7% in September compared with a year ago, up from 3.4% in August.
On a monthly basis, costs jumped 0.6% from August to September, the
biggest gain in five months, up from a 0.4% increase the previous
month. The cost of toys, new and used cars, sporting goods, and
shoes all rose at a rapid clip last month, the government said.
Natalie Kotlyar, national leader of BDO's retail and consumer
products practice, noted that she wouldn't read the retail sales
report as a reflection of broad consumer strength.
“With inflation running above 3% and gas prices high, part of this
gain is simply higher prices, and many shoppers are leaning on
savings and promotions to stretch their budgets,” she said.
Kotlyar noted that strong sales alongside paychecks that aren’t
keeping pace with prices can’t last forever, so retailers need to
protect their profit margins and keep inventory flexible as they
head into November and December.
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