Dining, Travel and Household Needs Fueling Retail Sales Growth: Visa

Consumers continued to make retailer tills ring in the first quarter, increasing sales, minus automobiles and fuel purchases, at a 4.5% growth rate over the same period in 2014, finds Visa Inc.’s latest Retail Spending Monitor.

Overall retail sales growth, include automobile sales, was a modest 1.2%. The largest growth was in restaurants and dining at 9.5% more spending than the year-ago quarter. Hotels, at 9.4%, was the next largest, Visa reported Thursday. The Retail Spending Monitor is based on transaction data gleaned from Visa’s payment network.

Three merchant categories saw declines. The largest was at gas stations, where consumers spent 20.9% less than they did a year ago. Visa says gasoline prices were down 30% from 2014, averaging $2.47 per gallon in April. “Consumers received an unexpected windfall on average of $1.19 per gallon compared to a year ago, or between $50 and $75 a month in average household savings,” the report says.

That savings in fuel costs may not spur other consumer purchases, Visa says. In a recent survey, only 30% of consumers said they planned to spend more at other retailers. Most—52%—planned to save the money.

For example, first-quarter 2015 clothing sales increased only 0.1% over the corresponding quarter in 2014. That is much less than the 3.7% growth recorded in March, according to Visa. Grocery and beverage stores spending increased 2.9%.

“What matters is not the price at the pump today, but where consumers see gas prices headed,” Wayne Best, Visa chief economist, said in a press release. “After gas prices rose every single day in February, 70% of consumers said they expected them to keep rising over the next three months, and not surprisingly, they modified their spending habits. We saw that trend again in April when gasoline prices steadily ticked upward in the latter half of the month, causing consumers to spend more cautiously and pocket much of the savings from lower prices at the pump.”