Highest Consumer Price Increase in a Year

A busy month for car dealerships lifted retail sales for the first time in three months while more expensive food and gas boosted consumer prices by the most in nearly a year.

Retail sales rose 0.4 percent last month, buoyed by auto and gasoline station purchases. Most retailers reported declines for the month. Excluding autos, sales climbed 0.2 percent, the Commerce Department said Friday.

Consumer prices rose 0.3 percent in July, the Labor Department said. That's the largest increase since last August to the Consumer Price Index, the government's most closely watched inflation measure. Energy prices jumped for the first time in five months.

Excluding volatile food and energy prices, the so-called "core" index increased 0.1 percent in July. The cost of housing, clothes, and used cars and trucks all rose. Over the past year, consumer prices rose 1.2 percent. That's up slightly from last month's 1.1 percent pace but still a mild increase.

Broad declines in retail sales have economists concerned that spending will slow further in the second half of this year. Households are saving more and spending less as they struggle with high unemployment and lackluster job growth. More...