Retail Sales Increase Slightly in June

WASHINGTON â€”  The consumer spending spree lost a little of its vigor in June, with new-car sales slowing slightly from their record May pace, and inflation remained muted, according to reports released Wednesday.

The Commerce Department said total retail sales edged up 0.1% last month to a seasonally adjusted $243.32 billion, after seeing a 1.2% jump in May. The department revised May’s rise upward from the previously reported 1.0%.

The Labor Department reported an unexpected drop in its producer price index, a gauge of prices paid to the nation’s factories, farms and refineries. Wholesale prices eased 0.1% in Jun--after having risen 0.2% in Ma--for the first decline in four months as prices for new cars and trucks tumbled. Analysts had expected a 0.1% rise in the PPI.

The core PPI rate, which excludes food and energy costs, fell 0.2% for the month. For May, the core rate increased 0.1%.

Producer energy prices fell 0.3% in June for the first decline since February, as gasoline and home heating oil costs retreated. Food prices increased 0.4%, a figure that reflects in part the biggest increase in beef costs since October 1985.

Analysts agreed that the economic data point to steady economic growth ahead, fueled by consumer spending, but opinion is split as to whether rising prices at the early stages of production may be hinting at faster inflation.

Prices paid for crude goods or raw materials jumped 1.4% in June after seeing a 5.5% surge in May. The cost of partly finished goods, or those at the intermediate stage of production, increased 0.4%, after rising 0.2% in May.

The report on June consumer prices, scheduled for release today, may give a clearer idea as to whether higher prices were being passed on to consumers.

Mark Vitner, an economist with First Union Corp. in Charlotte, N.C., said the rising intermediate goods costs might worry Federal Reserve policymakers, who said in May after they raised short-term interest rates a quarter of a percentage point that they were closely tracking the potential for inflation.

But economist Dave Huether of the National Assn. of Manufacturers said: “Finding inflationary pressures� in Wednesday’s figures “is about as easy as pushing an iceberg with your finger.�

Consumer spending as reflected in June retail sales reports remained buoyant, although it did lose some of the punch it packed earlier in the year. That could help slow second-half economic growth, because consumer spending accounts for two-thirds of U.S. economic activity.

In dollar terms, sales at new-car dealerships, which account for one-quarter of total monthly business, dropped 1% to $60.69 billion in June, after posting a 3.5% rise for May, when car sales set a record. But in numbers of vehicles, car and truck sales were near record levels in June, making for the best first half ever.