US retail sales weakest in six months

— US retail sales recorded their smallest increase in six months in February as households cut back on motor vehicle purchases and discretionary spending, the latest indication that the economy lost further momentum in the first quarter.

Other data on Wednesday showed a steady increase in inflation, with the consumer price index posting its biggest yearon-year increase in nearly five years in February. Firming inflation could allow the Federal Reserve to raise interest rates on Wednesday despite signs of slowing domestic demand.

The Commerce Department said retail sales edged up 0.1 per cent last month, the weakest reading since August. January’s retail sales were revised up to show a 0.6 per cent rise instead of the previously-reported 0.4 per cent advance.

Sales were likely held back by delays in issuing tax refunds this year as part of efforts by the government to combat fraud. Compared to February last year retail sales were up 5.7 per cent.

February’s retail sales gain was in line with economists’ expectations. Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.1 per cent after an upwardly revised 0.8 per cent jump in January. These so-called core retail sales, which correspond most closely with the consumer spending component of GDP, were previously reported to have increased 0.4 per cent in January.

In a separate report, the Labour Department said its Consumer Price Index ticked up 0.1 per cent last month as a drop in gasoline prices offset increases in the cost of food and rental accommodation. That was the weakest reading in the CPI since July and followed a 0.6 per cent jump in January.