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NEW YORK – Retail sales fell in March, after a slight gain in February lent an air of optimism that consumers were starting to spend again. While the 1.1 percent decline in March likely means the recession will persist into the second half of the year, it also gave Federal Reserve Chairman Ben S. Bernanke reason to believe that the "sharp decline" in the U.S. economy is slowing.
The drop followed increases in January and February that gave pause to a freefall in spending during the second half of 2008. Economists had expected an increase similar to the 0.3 percent gain recorded in February.
Another government report showed prices paid to U.S. producers unexpectedly fell in March after two months of gains, indicating the recession is keeping inflation under control, according to a Bloomberg news report.
The 1.2 percent decrease followed a 0.1 percent gain in February, according to the Labor Department. Excluding fuel and food, so-called core prices were unchanged. Over the last 12 months, wholesale expenses fell by the most in almost six decades, said the report.
Excluding automobiles, sales decreased 0.9 percent after a 1 percent gain in February.
In addition to rising unemployment, a late Easter holiday this year may have shifted sales out of March and into April, some economists said. Shifting holidays make it more difficult for commerce to take into account seasonal buying patterns when tabulating purchases.
"A chilly start to spring and a late Easter combined for dreary March sales," said Rosalind Wells, Chief Economist for NRF. "To compensate for the Easter shift, retailers typically look at March and April together to get a better look at how their stores performed. Easter should give a much-needed boost to April sales."
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