WASHINGTON: US retail sales rose more than expected in June as Americans bought motor vehicles and a variety of other goods, reinforcing views that economic growth picked up in the second quarter.
Other data on Friday showed consumer prices increasing for a fourth straight month in June on rising housing, gasoline and healthcare costs, indicating a steady build-up in inflation.
The stream of upbeat data and a rally on Wall Street could allow the Federal Reserve to raise interest rates later this year.
"The Fed will welcome the continued strength in consumer spending and the latest positive jobs report, but it's clearly in zero rush to tighten policy," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.
"These two reports might increase the odds of a September rate increase at the margin."
The Commerce Department said retail sales increased 0.6 percent last month after gaining 0.2 percent in May.
It was the third straight month of increases and lifted sales 2.7 percent from a year ago.
Excluding automobiles, gasoline, building materials and food services, retail sales shot up 0.5 percent after advancing 0.5 percent in May. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Economists had forecast overall retail sales edging up 0.1 percent and core sales gaining 0.3 percent last month.
Coming on the heels of a surge in job growth in June and an acceleration in manufacturing and services sectors activity, the solid retail sales report suggested the economy had regained speed after a first-quarter lull.
Strong domestic demand is being reflected in steady increases in consumer prices.
In a separate report, the Labor Department said its Consumer Price Index rose 0.2 percent last month after a similar gain in May.
In the 12 months through June, the CPI advanced 1.0 percent, matching May's increase.
The so-called core CPI, which strips out food and energy costs, also rose 0.2 percent in June, increasing by the same margin for three consecutive months.
That lifted the year-on-year core CPI gain to 2.3 percent from 2.2 percent in May.
This increase is higher than the average annual rate of 1.9 percent over the past 10 years. The Federal Reserve has a 2 percent inflation target and tracks an inflation measure which is currently at 1.6 percent.
Concerns about persistently low inflation contributed to the US central bank keeping interest rates unchanged last month.
The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade.
The dollar rose against a basket of currencies after the data, while prices for US government debt fell. US stock index futures extended gains.
June's strong increase in core retail sales could prompt economists to raise their second-quarter GDP growth estimates.
The Atlanta Fed is currently forecasting second-quarter GDP growth at a 2.3 percent annualized rate.
The economy grew at a 1.1 percent pace in the first three months of the year.
Retail sales will likely remain supported in the wake of a rally on the US stock market, rising wages and higher savings.
Retail sales in June were buoyed by purchases of building materials and garden equipment, which jumped 3.9 percent, the largest increase since April 2010. Online retail sales rose 1.1 percent, while receipts at sporting goods and hobby stores shot up 0.8 percent.
There was also a boost from furniture sales, which rose 0.5 percent.
Auto sales edged up 0.1 percent after declining 0.5 percent in May. Americans also spent more on grooming and paid more for gasoline, but cut back on apparel purchases and spending at restaurants and bars.
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