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Gas prices weigh on shoppers
Easter season pushing store sales higher but rising gas costs could cloud the season.
March 30, 2004: 12:42 PM EST
By Parija Bhatnagar, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Higher gas prices may be weighing on the minds of consumers even as Easter shopping accelerated last week, according to two sales reports Tuesday.

According to one measure, sales last week at the major retailers rose as shoppers picked up holiday-related merchandise. But a separate reading on chain store sales indicated that consumer spending could be impacted by rising prices at the pump.

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The Redbook report said weekly sales rose 6.9 percent for the week ended March 27 from a year earlier, up slightly from the preceding week's 6.3 percent gain. Sales so far in March are up 0.1 percent compared with February, the report said.

The Redbook survey uses a sample of stores open at least a year at general merchandise retailers with about 9,000 stores.

Retailers last year blamed a late Easter -- which arrived about three weeks later than the year before -- and poor weather for lost sales during the holiday.

Americans are expected to spend about $10 billion this year on candy, gifts and clothes for the holiday, according to the National Retail Federation.

Gas groaning

But a separate report Tuesday from the International Council of Shopping Centers and UBS suggested that soaring gas prices may dent spending not just on Easter bonnets but on spring clothing and other goods.

"Consumers report that the high gasoline prices are having a negative impact on their frequency of shopping trips, which in turn affects spending," Michael Niemira, ICSC's chief economist and director of research, said in the joint report.

“ This has become a very serious disruption in what could otherwise be a much better consumer spending climate. ”
Kurt Barnard
Retail consultant

The report said sales fell 1.9 percent in the week ended Saturday from the prior week. Sales for the week rose 6.6 percent compared with the same week a year earlier.

The ICSC-UBS report is compiled from a group of major discount, department and chain stores across the country that report weekly results.

Some industry watchers said they believe higher gas prices could be a nagging concern for consumers.

"This has become a very serious disruption in what could otherwise be a much better consumer spending climate," said Kurt Barnard, an independent retail consultant.

"Americans, for one reason or another, have not given up on their infatuation with SUVs that guzzle gas by the gallons. But there's only so much money to go around. If people are paying more to drive their cars, they will have less money to spend on other things."

The average price for a gallon of regular self-service hit a new record of $1.753 Tuesday, up 3/10th of a cent from Monday's average. The increase marks the sixth straight record, according to the AAA survey, which is updated weekdays.

"Consumers are already concerned that the labor market continues to lag behind an economic recovery," said Barnard. "They don't really need another negative distraction."

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But Frank Badillo, senior retail economist with Retail Forward, dismissed the notion that higher prices at the pump will do much serious damage to consumer spending.

"The impact of rising gas prices is mixed. With a little less cash in their pockets, consumers may not spend as much in a convenient store or on eating out. But the impact today on shopping habits is certainly less than it would have been 10 years ago," he said.

"These weekly sales numbers tend to be volatile. I think the more telling signs are longer-term trends," he added. "Retailers have got off to a strong start this year. We've been forecasting that the lingering job worries will dissipate as we move further into the year. As the economy continues to recover, we will see consumer spending gain momentum."  Top of page




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