What will gasoline prices do for retailers? Inflation elsewhere could mean more.

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Citigroup analyst Paul Lejuez favors value-oriented retailers such as Walmart.

Justin Sullivan/Getty Images

Gasoline prices are the highest in over a decade, so what does this mean for retailers? Less than you think, supports


Citigroup
.

Analyst Paul Lejuez reviewed the sector on Friday and wrote that “although rising gasoline prices may grab more headlines, we believe it’s inflation in other parts of the world. economy (such as food and clothing) which is a greater shock to the consumer.”

He noted that gas overall accounts for less than 2% of personal consumption expenditures, as measured by the Federal Reserve Bank of St. Louis, while food accounts for 8%. The result is that inflation in this category is much more likely to be a problem for consumers.

Also, although gasoline prices have been in the headlines, not all the news is bad. Consumer balance sheets are relatively strong, a tight labor market is helping job seekers, and wages, while not keeping up with inflation, are certainly on the rise, Lejuez noted.

Still, the risks increase, which makes Lejuez favor value-oriented retailers. He pointed out


General dollar

(symbol: DG) and


walmart

(WMT), as well as off-price retailers


Cos TJX
.

(TJX),


Ross Stores

(ROST), and


Burlington Stores

(BURL). They “have been known to provide discount brands and historically customers have gravitated to these retailers during tough economic times,” he said.

He also pointed out


Tractor Supply Co
.

(TSCO) as a beneficiary of rising grain prices, saying the recent trend will give the chain’s agriculture-focused customers more money to spend. Also,


boot barn

(BOOT) is expected to gain as higher oil prices boost activity in the energy sector, a win for those employed in the industry.

“The bottom line is that the rise in gasoline prices is not happening in a vacuum, and is just another piece of the overall inflationary picture that has been talked about for many months now,” Lejuez said. . “Could this be the proverbial straw that broke the camel’s back? We can’t ignore it, but we think the number of headlines and media attention exaggerate the importance of higher gas prices.

Write to Teresa Rivas at [email protected]

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