The U.S. Census Bureau will release its monthly retail sales report on Monday. Economists surveyed by Bloomberg expect a 0.4 percent gain in retail sales for March. Thus far, retail sales have trended softer this year than in 2023, with an unexpected 1.1 percent drop in January and an underwhelming 0.6 percent gain for February.

Here are five things to look out for in Monday’s release.

  1. Inflation

Even if the numbers are better than expected, they will be affected by rising inflation, economists say. The upcoming retail sales report will follow the recent release of the Consumer Price Index, which tracks the change in prices for a basket of goods over time. Last Friday, the CPI came in unexpectedly hot with a 0.4 percent increase, 3.5 percent higher than March last year.

  1. Auto and Gas Prices

Along those lines, economists expect higher gas prices to impact the retail sales report. Gas prices, which the AAA says have increased from around $3.41 a month ago to about $3.63 as of April 14, have also been impacted by international supply issues such as conflict near the Red Sea, according to the U.S. Energy Information Administration. While auto sales are expected to be weak, higher gas prices from inflation will likely offset any softness in that category.

  1. Disposable Income 

Economists are also monitoring consumers’ pockets. Consumers have likely run out of the money that they saved over the pandemic, such as the stimulus checks, which contributed to post-pandemic revenge spending and increased retail sales.

“[Consumers] are saving less and stretching themselves and making themselves vulnerable,” said Peter G. Morici, economist and former Professor Emeritus at the University of Maryland.

But the continued growth of the job market will likely make up for that. According to the Employment Situation report released on April 5, around 303,000 jobs were added in March, while the unemployment rate decreased from 3.9 percent to 3.8 percent. With more jobs comes more people that can spend money.

  1. Holiday Sales…Maybe

March saw two holidays this year: Easter and Ramadan. Holidays can serve as important sales boosters and people purchase clothing, groceries or eat out to celebrate. However, economists are unsure how much of an impact these holidays will have on March retail sales due to their movability, along with overall shifts in how holidays like Easter have been celebrated over time.

“It’s something that adds another layer of uncertainty with regard to if the seasonal factor is properly adjusted for increased spending on clothing and that sort of stuff,” said Kevin Cummins, chief economist at NatWest Markets. 

  1. Interest Rates

While not as big of a player as the CPI or jobs report, the retail sales indicator also plays a secondary role in whether the Federal Reserve cuts interest rates, especially since consumer demand affects inflation.

“If consumers continue to spend at a relatively high clip on services, then they’re going to continue to see some inflation,” Shannon Grein, an economist at Wells Fargo, said.

Still, the Fed would have reasons to be concerned if the retail sales numbers dropped too dramatically, which would indicate a possible recession and a need to cut rates. But with unexpected CPI numbers showing that inflation is still above its two percent target, economists don’t expect the Fed to cut interest rates any time soon.