Lower Gas Prices Already Leading to Bigger Baskets

Retailers like Walmart attribute Q3 increase in part to low prices at the pump.

November 17, 2014

WASHINGTON – As gas prices hover at their lowest level in years, economists and analysts have suggested that this should be good news for the retail industry. With more money in their pockets, perhaps consumers would get off the sidelines and start spending more at shopping malls and restaurants. In fact, the latest NACS Consumer Fuels Survey showed that 14% of consumers plan to spend more in the coming holiday season, due to the lower gas prices.

Now, data released last week by the U.S. Commerce Department shows that shoppers indeed loosened their purse strings in October, as retail sales rose a healthy 0.3% to $444.5 billion. And, according to an article in the Washington Post, the gains were broad-based, with a rise in all categories except for gas and electronics.

Further, in third-quarter earnings reports, both Walmart and JC Penney cited lower gas prices in part for the quarter’s sales boost. Walmart’s sales rose for the first time in seven quarters and executives said low prices at the pump were crucial to that turnaround, giving their shoppers a nudge to spend big on seasonal events such as back-to-school and Halloween. Notably, the retailer’s sales numbers increased due to larger basket sizes, not increased customer visits.

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