WASHINGTON (Reuters)

United States retail sales increased more than expected in June as consumers bought motor vehicles and a range of other goods even as they paid more for gasoline.

Retail sales rose 1.0 per cent last month, the Commerce Department said today (July 15). Data for May was revised up to show sales falling 0.1 per cent instead of 0.3 per cent as previously reported.

Economists polled by Reuters had forecast retail sales would increase 0.8 per cent, with estimates ranging from as low as a 0.2 per cent drop to as high as a 2.2 per cent increase. Retail sales are mostly made up of goods, and are not adjusted for inflation.

Annual consumer prices shot up 9.1 per cent in June, the largest increase since November 1981, putting the Federal Reserve on track to deliver another 75-basis-point interest rate increase at the end of this month. The US central bank has hiked its policy rate by 150 basis points since March.

Gasoline prices surged in June, averaging above US$5 per gallon, according to data from motorist advocacy group AAA. That boosted sales at service stations. Prices at the pump have since declined from last month’s record peaks and were averaging US$4.577 per gallon on Friday.

Retail sales also got a lift from a rebound in motor vehicle purchases after being weighed down by shortages.

Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.8 per cent in June. Data for May was revised lower to show these so-called core retail sales falling 0.3 per cent instead of being unchanged as previously reported.

Core retail sales correspond most closely with the consumer spending component of gross domestic product. Despite June’s rise, inflation-adjusted core retail sales were probably softer. That implies moderate consumer spending.

Second-quarter GDP estimates range from as low as a 1.7 per cent annualised rate of decline to as high as a 1.0 per cent pace of growth. The economy contracted at a 1.6 per cent rate in the first quarter because of a record trade deficit.

With the labour market generating jobs at a brisk clip and 11.3 million unfilled positions at the end of May, a second straight quarterly decline in GDP would not necessarily mean the economy was in recession. Excess inventories would probably account for much of any decline in GDP last quarter.