Retail sales up 0.2 pct. in Aug.; wholesale prices up, too

WASHINGTON (AP) -- Americans boosted their spending at retail businesses only modestly in August, indicating that economic growth remains sluggish. Consumers bought more cars, furniture and electronics last month but held back on most other purchases. Meanwhile, wholesale prices also showed a modest increase last month.

Spending at retail businesses rose just 0.2 percent last month, the Commerce Department said Friday. It was the smallest gain in four months. But the government said retail spending was stronger in the previous month than first estimated, revising the July estimate to 0.4 percent from 0.2 percent

Excluding volatile spending on autos, gas and building supplies, sales in August increased just 0.2 percent, or less than half July's 0.5 percent gain.

Consumer may be growing more cautious about spending, a trend that could slow economic growth in the July-September quarter. Slow wage growth, modest job gains and higher taxes have limited Americans' spending power.

Retail sales are closely watched because they're the government's first look each month at consumer spending, which accounts for 70 percent of economic activity.

Sales of autos and furniture both jumped 0.9 percent in August. Electronics and appliance sales rose 0.8 percent. But clothing sales dropped 0.8 percent and sporting goods sales also fell.

WHOLESALE PRICES UP

Higher energy costs pushed U.S. wholesale prices up 0.3 percent last month. Prices rose a modest 1.4 percent over the past year, the lowest one-year gain since April.

Excluding volatile food and energy costs wholesale prices were unchanged in August, the Labor Department said Friday. They were up 1.1 percent over the past year, smallest gain since June 2010 and another sign that inflation remains under control.

Energy prices climbed in late August as tensions rose over Syria, accounting for two-thirds of the monthly increase in wholesale prices. More expensive vegetables and chicken lifted food prices 0.6 percent in August from July.

The Federal Reserve, which meets next week, closely monitors wholesale and consumer prices, determined to keep inflation running at around 2 percent.

Consumer prices in July were up just 2 percent over the previous year. Core consumer prices have increased 1.7 percent in the past 12 months.

A weak economy has contained inflation. Companies can't raise prices because demand for their products isn't strong enough.

The Fed's policymaking committee is expected to decide next week whether to scale back an $85 billion-a-month bond-buying program that is meant stimulate the economy by pushing down long-term interest rates and encouraging borrowing and spending. Some committee members believe the economy has gained enough momentum to justify reducing the purchases though not ending them.

But Charles Evans, president of the Federal Reserve Bank of Chicago, has said that he wants to see more data showing economic strength and more evidence that ultra-low inflation is only temporary.