people shop for clothes at a target retail chain in westbury new york us may 20 2021 reutersshannon stapletonfile photo washington aug 17 reuters  us retail sales were unchanged in july as declining gasoline prices weighed on receipts at service stations but consumer spending appeared to holding up which could further assuage fears that the economy was already in recession the commerce department on wednesday said that retail sales flat reading last month followed a downwardly revised 08 increase in june retail sales in june were previously reported to have advanced 10 economists polled by reuters had forecast that sales would gain 01 with estimates ranging from as low as a 03 decline to as high as a 09 increase retail sales are mostly goods and are not adjusted for inflation monthly consumer prices were unchanged in july as gasoline prices retreated from record highs lowering the annual rate of increase in inflation to 85 from 91 in june the national average gasoline price dropped to about 427 per gallon in the last week of july after hitting an alltime high just above 500 in midjune according to data from motorist advocacy group aaa prices at the pump were averaging 3943 per gallon on wednesday excluding automobiles gasoline building materials and food services retail sales increased 08 last month after rising 07 in june these socalled core retail sales correspond most closely with the consumer spending component of gross domestic product they were previously reported to have risen 08 in june consumer spending grew at its slowest pace in two years in the second quarter the modest rise was offset by weakness in business and government spending as well as residential investment resulting in the second straight quarter of gdp contraction but with the labor market maintaining a brisk pace of job growth in july and industrial production hitting a record high the economy is probably not in recession still the federal reserves aggressive interest rate increases to dampen demand and curb inflation have left the economy vulnerable to a downturn the us central bank has hiked its policy rate by 225 basis points since march core retail sales are holding up even as spending is shifting back to services like restaurants recreation and air travel as americans learn to live with the covid19 pandemic high inflation has made consumers more price sensitive leaving retailers with excess inventory and forcing them to offer price discounts retail bellwether walmart wmtn on tuesday said that it had cleared most of its summer seasonal inventory but still had work to do in reducing its stock of electronics home goods and apparel read more reporting by lucia mutikani editing by paul simao and mark porter