Retail sales declined 0.1 percent in February, less than economists expected but still down from an 1.8 percent increase in January, Bloomberg reported.

According to a Commerce Department report, excluding a 4.3 percent decrease in sales at automobile dealers and auto parts stores, sales rose 0.7 percent.

A decrease in fuel costs and tax cuts may help boost American spending, but rising unemployment and falling home and stock values may delay a sustained increase in purchases until late 2009, economists believe.

A separate Labor Department report today showed that initial claims for unemployment insurance rose to 654,000 last week, the sixth straight week that figure has been above 600,000.

The retail sales increase is in response to discounts as companies try to reduce surplus inventory, said Roger Kubarych, chief U.S. economist at UniCredit Global Research in New York. But for sales increases to be sustained, it would require personal wealth to go up, he said.

Excluding automobile, gasoline and building materials, which are used to calculate gross domestic product figures for consumer spending, sales rose 0.5 percent after a 1.7 percent increase in January.