US retail sales recorded their largest decline in 11 months in December as demand fell almost across the board, which could temper expectations for a sharp acceleration in consumer spending in the fourth quarter.

The commerce department said on Wednesday retail sales fell 0.9 per cent last month after a 0.4 per cent increase in November.

It was the biggest decline since last January and exceeded economists’ expectations for only a 0.1 per cent drop.

Excluding automobiles, gasoline, building materials and food services, sales fell 0.4 per cent last month after a 0.6 per cent rise in November.

Economists expected the so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, to rise 0.4 per cent last month. Consumer spending accounts for more than two-thirds of US economic activity.

US stock index futures extended losses on the data, while prices for US treasury debt jumped. The dollar fell to a four-week low against the yen.

December’s surprise decline could dampen expectations for a sharp rise in consumer spending in the final three months of 2014. But with the labour market strengthening and gasoline prices continuing to fall, December’s decline in core retail sales will likely be temporary.

The weak retail sales could lead some economists to expect that the Federal Reserve will delay its first interest rate hike to later in the year as opposed to June as many currently anticipate.

Retail sales were weighed down by declines in receipts at electronic and appliance, clothing, building materials and garden equipment stores, as well as auto dealerships.

Online sales also fell as did receipts at sporting goods stores. Lower gasoline prices weighed on service station sales, with receipts falling 6.5 per cent – the biggest decline since December 2008.

Receipts at furniture stores and restaurants and bars rose.

In a separate report, the labor department said import prices fell 2.5 per cent last month as the cost of energy plummeted.

It was the largest decline since December 2008 and followed a 1.8 per cent drop in November.

The weak import prices pointed to subdued inflation pressures over the coming months.

– Reuters