July 15 (Bloomberg) -- Retail sales in the U.S. rose less than forecast in June, a sign the boost from the tax rebates may already be fading.

The 0.1 percent increase was the smallest since February and followed a 0.8 percent gain in May that was less than previously reported, the Commerce Department said today in Washington. Purchases excluding gasoline dropped.

The report adds to concern that households may retrench as home values fall, fuel prices surge and unemployment climbs. Consumers last month shopped mainly at discounters including Wal-Mart Stores Inc. and Costco Wholesale Corp. to stretch the buying power of the stimulus checks, industry reports showed.

``We've already seen the maximum boost from the rebates,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. ``Spending will be weaker in coming months.''

A separate report from the Labor Department showed prices paid to U.S. producers rose for a sixth month in June. The 1.8 percent increase was the biggest since November and followed a 1.4 percent jump the previous month.

The dollar remained weaker against the euro after the reports, while the yield on the benchmark 10-year Treasury note dropped 3 basis points from yesterday to 3.82 percent at 8:51 a.m. in New York.

Economists' Estimates

Retail sales were projected to rise 0.4 percent after an originally reported 1 percent gain the prior month, according to the median estimate in a Bloomberg News survey of 81 economists. Forecasts ranged from a drop of 0.4 percent to a gain of 1.5 percent.

Sales excluding automobiles increased 0.8 percent. They were forecast to increase 1 percent from the prior month, according to the survey median.

Americans bought fewer cars, furniture, electronics and building materials as gasoline prices soared. Today's report showed sales at automobile dealerships and parts stores dropped 3.3 percent, the most since February 2006.

That's consistent with industry figures which signaled Americans are shunning big-ticket purchases. Cars and light trucks sold in June at a 13.6 million annual pace, the weakest since 1993, according to data issued earlier this month.

Sales of furniture fell 1.4 percent and purchases of electronics dropped 0.6 percent. Both were the biggest declines so far this year.

Gasoline Receipts

A surge in receipts at service stations as gasoline prices rose to a record prevented total sales from falling. Filling station purchases jumped 4.6 percent last month, the most since November. Excluding gas, retail sales declined 0.5 percent, the biggest drop this year.

Regular unleaded fuel prices topped $4 a gallon for the first time in June and have continued climbing this month, according to AAA.

The jump in fuel prices may have also caused Americans to limit visits to restaurants. Sales at food services and bars fell 0.2 percent.

Retailers that gained sales last month included grocery, health care, clothing and sporting goods stores.

Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product figures for consumer spending, sales rose 0.3 percent, after a 0.7 percent increase in May. The government uses data from other sources to calculate the contribution from the three categories excluded.

Purchasing Power

Rising energy costs erode households' purchasing power and add to the risk that companies will try to raise prices, triggering a broader pickup in inflation.

The twin concerns may prompt Federal Reserve policy makers to keep interest rates unchanged this year, a Bloomberg survey last week showed. Economic growth will slow to a 0.5 percent annual rate in the fourth quarter, the weakest pace in six years, and consumer spending will post the smallest gain since 1991, according to the economists surveyed.

The government distributed $86.1 billion in stimulus checks through July 4, out of a total plan of about $110 billion. Rebate-linked promotions boosted sales at retail stores open at least a year to a better-than-forecast 4.3 percent gain in June, according to the International Council of Shopping Centers.

The industry figures for same-store sales account for about 17 percent of total retail purchases, which make up almost half of consumer spending. Consumer spending itself accounts for more than two-thirds of the economy.

Wal-Mart's same-store sales jumped 5.8 percent, the most in four years. The Bentonville, Arkansas-based company's U.S. discount stores and its Sam's Club membership warehouses drew additional customers who spent more on average per visit than in prior months.

``We continue to see a shift in the overall mix toward fuel, food and consumables, as our members manage through the current environment,'' Doug McMillon, Sam's Club president and chief executive officer, said in a statement on July 10.

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

Last Updated: July 15, 2008 08:54 EDT