US consumers retrenched from housing and credit turmoil in December, pulling overall retail sales down 0.4% for the month, the Commerce Department said.
The report, the worst performance in six months, highlighted the spreading woes from housing and credit that hit consumers during the key holiday season.
Analysts had expected a drop of 0.1% for retail sales, which are a key driver of overall economic activity. Excluding cars, which can show wide fluctuations, sales were also down 0.4%.
Over the full 12 months of 2007, retail sales were up 4.2% and rose 4.6% when cars are excluded.
Car sales fell 0.4% in December after a revised 1.4% decline the previous month. Excluding cars and petrol, retail sales fell 0.2% in December.
The holiday gift-buying season did little to lift sales in a broad range of retail categories. Electronics and appliance store sales fell 1.9% in the month, the lowest since February 2006, the report showed.
Building material and garden supply store sales fell 2.9%; clothing store sales dropped 2% and sales in sporting goods, hobby and book stores fell 2%. Even petrol station sales fell 1.7%, despite higher gas prices that have been boosting sales in recent months.
The decline was the steepest since June, and excluding cars was the deepest since August.
A separate report by the Labor Department showed inflation at the wholesale level cooled in December as producer prices fell 0.1%.
The report showed tamer inflation after a strong 3.2% increase in the producer price index (PPI) in November. Core prices, which exclude volatile food and energy costs, showed a modest 0.2% rise in December after a 0.4% increase in November.
