The Census Bureau will release the advance monthly retail sales report for March on Thursday. Retail sales are projected to rise 0.6 percent, according to a survey of Bloomberg analysts, indicating that inflation and higher prices will primarily fuel rising sales.  

Here are five things to watch out for in the report released on April 14 at 8:30am EDT:

Inflation, here for (not) a good time, (hopefully) not a long time

Preoccupation with inflation has become the great American pastime of 2022. In a March Gallup poll, for instance, one in five people surveyed think that inflation or fuel costs are the nation’s biggest issues. It will now remain top of mind in the wake of news that inflation reached 8.5 percent over the last year in March, the fastest pace year-over-year in 40 years. The rise was driven in part by steep gasoline prices. The impact of inflation in the retail sales report could be reflected in both an uptick in gas station sales and a slowdown of spending in bars and restaurants and on online and in-person shopping. 

“For so many Americans, gasoline is an essential good. You can’t get to work, you can’t get to school without it,” said Christopher Low, Chief Economist at FHN Financial. “And when price increases are big, it often leads to a quick change in spending behavior.”

The wrath of the pump

As the war in Ukraine ramped up and continued throughout March, the conflict caused energy prices to soar. US average gas prices hit a high of $4.33 a gallon on March 12. Economists expect that the bump in gas prices will correlate with a rise in gas station sales in March since the retail sales report isn’t adjusted for inflation.  But that’s not because people are buying more gas than usual. Rather, they’re spending more to fill up their tanks. Not only are gas station sales likely to skyrocket, the sector will be the main reason for any increase in total retail sales. 

Subbing hamburger for steak

Inflation could impact consumer spending at grocery and other food stores in two ways. Either sales could jump due to the sectors’ higher prices, which are attributed to labor shortages and increases in the cost of food processing and transportation. Or, consumers may have spent less at grocery stores, as they did in February. They saved by substituting for lower cost items and using coupons.

To offset elevated grocery and gas prices, Americans may have pulled back their spending in bars and restaurants. This reshuffling would follow a strong February when bars and restaurants saw a 2.5 percent jump from the previous month. The uptick corresponded with the lifting of COVID-19 vaccine requirements and mask mandates and as a larger swath of Americans adopted a laissez faire attitude toward the virus.

While the Russia-Ukraine war will eventually impact food prices, Americans, unlike Europe and the developing world, won’t see the impact until fall. Even then, the effects are thought to be minor, because there’s ample supply domestically. 

Sticker shock keeps car sales weak

Car sales are expected to have slowed due to price increases. The cost of autos remains high because of a tight supply due to still a lack of semiconductors and a labor shortage in the industry. Automakers have fought back against the shortage of cars in two ways: They’ve raised prices, but they’ve also focused on producing more expensive models with bigger margins. 

“There’s sticker shock,” said Stephen Gallagher, Chief Economist of Societe Generale. “The  people willing to pay such high prices have paid it already.”

Rooting for a goods spending slowdown

Americans are binging on services, like hotels, flights and live events. That could put less pressure on good prices. The Fed is certainly hoping for that as it allows for supply to catch up with demand. In the Mastercard Spending Pulse, which reports on national goods and services sales across all payment types, consumer spending wasn’t only limited to items, like appliances, clothes and electronics, which had been the prevailing spending pattern during the pandemic. The report indicates that spending is no longer concentrated in goods. 

Low thinks this shift is what the Fed is rooting for. “If inflation is going to be tamed, it will be because demand slows down to a point where supply can keep up.” 

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