NEW YORK CITY, New York: Consumers increased spending only marginally in May, as persistently high prices for necessities and elevated interest rates restrained their purchasing power.

According to the Commerce Department, retail sales rose 0.1 percent in May, falling short of economists' expectations. April sales were revised downward to a 0.2 percent decline from a previously reported unchanged figure. This follows a 0.6 percent rise in March and a 0.9 percent increase in February, after a 1.1 percent drop in January due to severe weather conditions.

Retail sales rose by the same 0.1 percent, excluding gas prices and auto sales. Falling gas prices partly offset the slight increase in May. Without gasoline sales, retail sales rose 0.3 percent. According to AAA, the national average price for a gallon of unleaded gasoline was US$3.45 as of June 17, down from $3.59 a month ago.

Government retail data is not adjusted for inflation, which remained unchanged from April to May. High inflation continues to inflate retail sales figures, yet economists noted the report reflects cautious consumer behavior. The weaker-than-expected retail sales increase the likelihood that the Federal Reserve might consider cutting interest rates in the near future.

"Consumer spending is cooling in a fairly orderly fashion," said Jeffrey Roach, chief economist for LPL Financial in Charlotte, North Carolina. He added, "So far, the economy could pull off a soft landing, especially if the Fed is quick to adjust policy as conditions change."

The report revealed mixed performances across different categories. While auto and vehicle dealer sales increased, sectors related to home sales saw declines. Sales at clothing and accessory stores rose 0.9 percent, electronics and appliance stores posted a 0.4 percent gain, and online sales climbed 0.8 percent. However, business at building material and garden supplies stores fell 0.8 percent, and sales at gas stations dropped 2.2 percent. Restaurant sales, the only service category tracked in the monthly retail sales report, fell 0.4 percent in May.

A strong job market and rising wages have fueled household spending, but it remains inconsistent amid rising credit costs and persistent inflation. To alleviate some pressure on consumers, retailers like Target and Walmart have introduced temporary and permanent price cuts heading into the summer months.

Earlier this month, the government reported that American employers added a robust 272,000 jobs in May, an acceleration from April, indicating that companies remain optimistic about the economy to continue hiring despite high interest rates.

Last week, the government reported a substantial cooling of inflation in May, with costs for gasoline, new cars, and car insurance falling. Core consumer prices, which exclude food and energy, rose 0.2 percent from April to May, the smallest increase since October, and showed a 3.3 percent year-over-year increase, down from 3.6 percent in the previous month.

Despite these positive signs, consumer sentiment has continued to decline. The University of Michigan's consumer sentiment index dropped to 65.6 this month from 69.1 in May, reflecting ongoing anxiety over inflation.

Retail executives report that while shoppers are still spending, they are more selective about their purchases. Darren Rebelez, president and CEO of Casey's General Stores, noted that customers are shifting their spending habits due to rising costs, such as moving from candy to baked goods and opting for cheaper soda fountain beverages over bottled sodas.

Additionally, companies are enhancing customer experiences to attract more spending. Lowe's Inc., for instance, has partnered with soccer player Lionel Messi and the Conmebol Copa America USA tournament to boost its marketing efforts and engage soccer fans.

"It is a significant opportunity for us to grow," said Jennifer Wilson, Lowe's chief marketing officer. "And so this is also an effort for us to make that relationship stickier."