U.S. retail sales rose slightly in June, as falling gas prices weighed on gas station revenues, while bargain-hunting consumers continued to support core spending.

The Commerce Department's Census Bureau said on Thursday that retail sales rose 0.2% last month, after May's data was revised up to show growth of 1%.

Economists polled by Reuters had forecast retail sales, which mostly comprise goods and are not adjusted for inflation, rising 0.2%, after a preliminary reading of 0.9% in May. Estimates ranged from a decline of 0.4% to an increase of 1%.

Data from the U.S. Energy Information Administration showed the average price of gasoline fell to $4.18 per gallon in June, compared with $4.61 in May.

The decline in fuel prices, driven by lower oil prices amid a temporary ceasefire between the United States and Iran, gave households more room to spend on other sectors. However, the collapse of the truce last week and the resumption of military operations in the Middle East have pushed oil and gasoline prices back up.

In contrast, core retail sales, which exclude autos, gasoline, building materials, and food services, rose 0.5% in June, after May's growth was revised to 0.8%. This reading is closely tied to the consumer spending component of GDP, and earlier data had shown a 0.7% rise in May.

Amazon's Prime Day event at the end of the month, along with promotional campaigns by competing retailers, likely supported the rise in core sales.

The FIFA World Cup is also believed to have boosted revenues at restaurants and cafes.

Bank of America Institute, in a report released Wednesday, said analysis of payment card data showed spending at discount clothing stores and budget grocery stores has been rising since the start of the year, noting that 'price-sensitive shoppers are increasingly turning to general merchandise stores for deals and discounts.'

Tariffs on imports, along with the fallout from the conflict in the Middle East, continue to strain household budgets. However, spending continues to be supported by high-income households, which have benefited from stock market gains.

The institute added that low-income households have become more inclined to buy lower-cost goods, noting that their spending rate at discount clothing stores was five times that of high-income households since the start of 2026.

The Federal Reserve's Beige Book report, released Wednesday, showed that consumer spending rose slightly in early July, with many districts noting a decline in spending on non-essential goods or a shift toward cheaper alternatives.

Economists expect consumer spending, which accounts for more than two-thirds of the U.S. economy, to regain momentum in the second quarter after nearly stalling in the first quarter (January-March).

The Atlanta Federal Reserve's GDPNow model estimates U.S. economic growth at a 1.3% annualized rate in the second quarter (April-June), compared with 2.1% growth in the first quarter.