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Car slump weakens US retail sales

Separate figures from the US show weak retail sales growth last month and a strong rise in inflationary pressures.

The Commerce Department said total sales at US retailers rose by a less than expected 0.1% in June, as car sales had their biggest drop in more than two years.

Car and car parts sales fell 3.3% in June, their worst month since February 2006. They tumbled 9.5% from a year earlier. Excluding cars, retail sales rose 0.8% in June, also below economists' forecasts.

Economists had expected government tax rebates to give a bigger boost to retails sales in June, despite the weak overall US economy. But much of that boost appears to have been reflected in May gains.

Meanwhile, the Labor Department said US factory gate prices rose by a far larger than expected 1.8% in June as energy costs soared. But core inflation - which excludes food and energy - edged up just 0.2%. Energy prices were up 6% in June, the largest gain since November 2007.

The Labor Department said producer prices over the last 12 months were up 9.2%, the biggest increase since a 10.4% gain in June 1981.