Consumers aren’t expected to curtail retail spending despite another round of gas price spikes at the pump this week, said officials in the retail industry.
“Consumers have been seeing gas prices increase fairly steadily over the last couple of years,” said Scott Krugman, a spokesman for the National Retail Federation, a Washington-based trade association that represents the country’s major retailers. “But every time [prices increase] analysts expect to see some sort of drought in retail spending. We haven’t seen it yet.”
Prices jumped Monday following an announcement by oil giant BP that it will shut down one of its biggest Alaskan oil fields in order to replace 16 miles of corroded pipeline. While the announcement only pushed gas prices up by about 1 cent per gallon in the Washington metro region, prices are up by 7 cents over last month and 73 cents over a year ago.
But a bump in prices at the pump is not enough to deter consumers from shopping — good news for retailers heading into the back-to-school season.
In fact, back-to-school retail sales are expected to reach $17.6 billion this year, a 5.5 percent increase over last year, according to projections from the National Retail Federation.
“During the 2005 holiday season, all anyone was talking about was the impact high gas prices and high heating prices were going to have on consumer spending,” Krugman said. But consumers actually outspent the association’s projections during the fourth quarter of last year.
Rising gas prices are, however, touching other aspects of local business. Although retailers aren’t panicking yet, some local business owners are citing rising gas prices as a serious worry. According to a recent survey of local business owners by Washington-based iQ Research and Consulting, 26 percent said energy prices and the ongoing conflict in the Middle East were making them pessimistic about the Washington business climate.
“You now have what could be a ‘perfect storm’ brewing at the pumps,” said John B. Townsend, a spokesman for AAA Mid-Atlantic. “Gasoline prices were already extremely expensive and now the combination of shutting down the nation’s largest producing oil field mixed with the growing uncertainty in the Middle East conceivably could force prices higher, as traders and market watchers become more unnerved.”
Back-to-school spending
» The average family is expected to spend $527.08 on back-to-school shopping this year, up from $443.77 last year.
» Total back-to-school spending is expected to reach $17.6 billion this year, up from $13.4 billion last year.
Source: National Retail Federation
