U.S. retail sales rebounded in July but showed hints of lingering economic softness underscored by separate figures indicating underlying inflation pressures stuck at their lowest level since the 1960s.
Sales climbed 0.4 percent last month following a revised 0.3 percent drop in June, the Commerce Department said on Friday, below forecasts for a 0.5 percent gain.
However, the rise were concentrated in vehicle and gasoline sales, suggesting momentum in other parts of the economy remains tame.
After emerging from its longest slump since the Great Depression, the U.S. economy has slowed in recent months, raising fears of a renewed downturn.
A persistently bleak job market underpins such concerns, although the latest figures were not quite bad enough to indicate the recovery had stalled.
Consumers are still cautious, but it is not double-dip material, said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, Pennsylvania.
Higher energy costs did boost U.S. consumer prices by 0.3 percent, the first rise in four months. But prices outside food and energy climbed just 0.1 percent, leaving the year-on-year gain, a measure favored by policymakers at the Federal Reserve, at just 0.9 percent for a fourth consecutive month.
Some analysts were relieved that figure did not soften further.
There's been a lot of talk about deflation but no sign of that is emerging in the data yet, said Zach Pandl, economist at Nomura Securities in New York.
Market reaction to the figures was modest, with stock futures briefly extending losses and the dollar edging higher against the euro. U.S. Treasury prices edged higher.
The retail data revealed some potentially troubling signs. Excluding autos, sales advanced just 0.2 percent compared with a median forecast of 0.3 percent. Gasoline station receipts, which sometimes reflect price rises rather than increased demand, jumped 2.3 percent. When autos and gasoline were stripped out, sales actually fell 0.1 percent.
Retail sales are a key component of growth for a country where consumer spending makes up about two-thirds of total economic activity.
(Additional reporting by Doug Palmer in Washington and Chris Reese and Rodrigo Campos in New York; Editing by Andrea Ricci)