Americans bought fewer cars in May, pulling retail sales down for the first time in nearly a year.
Sales among U.S. retailers fell 0.2 percent last month, the Commerce Department said. It was the first decline after 10 straight increases and the latest report signaling the economy has lost momentum. Consumers are struggling to deal with high gasoline prices and a slowdown in hiring.
Auto sales dropped 2.9 percent, the largest decline since February 2010. But excluding the weak car sales, retail sales rose 0.3 percent.
A lack of deals and the shortage of some fuel-efficient models in high demand were to blame for the decline in auto sales. The natural disasters in Japan disrupted shipments of cars and component parts to the United States.
“The decline in headline retail sales during May can be chalked up to slumping auto sales,” said Alistair Bentley, an economist at TD Economics. “This was to be expected following the sharp rise in gas prices and the tsunami in Japan, and thus should not be interpreted as a dramatic swing in consumer sentiment.
Prices at the wholesale level rose at the slowest pace in 10 months, according to separate report from the Labor Department. Food costs fell by the most in a year and gas prices rose by the smallest amount in eight months.
The figures suggest consumers could see some relief from rising prices soon.
Consumers had been paying an average of nearly $4.00 for a gallon of gas in early May.
On Monday, the national average was $3.70 per gallon, according to AAA. Still, that's a dollar more than what consumers paid a year ago.
Higher gas prices have left consumers with less to spend on discretionary goods. Analysts hope that the economy will regain momentum in the second half of this year if gasoline prices fall further.
Sales at gasoline stations rose 0.3 percent, much slower than the 1.4 percent jump in March.
Sales at department stores and big general merchandise stores such as Wal-Mart and Target edged down 0.1 percent in May. Many of the nation's big retail chains reported shoppers pulled back on such as clothing and home goods.
The Associated Press