Official figures show that US retail sales fell for first time in nearly a year in May as consumers spent less on cars.
The Commerce Department said retail sales dropped 0.2% last month. It was the first decline after 10 straight increases. The fall was, however, not as big as economists had expected.
A cutback on incentives and supply disruptions stemming from the Japan crises pushed car sales down 2.9%. It was the biggest setback for the industry in three years. Excluding cars, retail sales rose 0.3%.
The slump in retail sales was the latest report signalling that the US economy lost momentum in May. Consumers are struggling to deal with high petrol prices and a slowdown in employment growth. While the surge in petrol prices eased in May, pump prices are still significantly higher than a year ago.
Separate figures showed that US wholesale prices rose in May at the slowest pace in 10 months, as food costs fell and rises in energy prices slowed.
The Labor Department said producer prices climbed 0.2%, bigger than the 0.1% expected by economists but down from April's 0.8% increase.
Compared to a year earlier, prices surged 7.3%, the largest annual rise since September 2008, just as the financial crisis took a turn for the worse and dragged prices lower globally.
Excluding food and energy, wholesale prices jumped 0.2%, while year-on-year core inflation remained at 2.1%, its highest since August 2009.
Obama warns on debt ceiling deadline
Meanwhile, US President Barack Obama has said a delay in raising the US debt ceiling could reverse the fledgling recovery and trigger a new economic meltdown.
'We could actually have a reprise of a financial crisis, if we play this too close to the line,' Obama told NBC television's Today Show programme.
Obama and congressional Republicans have been engaged in heated wrangling over raising the debt ceiling, with the Republicans demanding deep cuts in exchange for any deal to raise the spending limit.
The US government is edging perilously close to an August 2 date by which the federal government must increase its debt limit to borrow the money it needs to pay its bills. If no agreement between the two sides is reached, the government risks defaulting on its obligations, an outcome that economists have said could have dire consequences.
Treasury Secretary Timothy Geithner says that he has found stopgap ways to continue government operation for another couple of months before the government defaults on its obligations.
