Time for a new plan

Because the old one ain't working.

Retail sales barely budged last month as inflation heated up, an uneasy trend that underscores the difficult policy choices faced by the Federal Reserve.

Sales of retail goods and food grew just 0.1 percent in June, according to a report released Tuesday by the Commerce Department, a sign that Americans are reluctant to make big purchases as the effect of the government’s stimulus package begins to fade.

Sales had risen 0.8 percent in May as millions of Americans received tax rebate checks in the mail, but last month showed a steep drop in demand for automobiles, electronic equipment and furniture, among other products.

Consumers spent a large amount of money on one product — gasoline — and little else. Outside of fuel, sales actually dropped last month by 0.5 percent.

The slowdown in spending is a troubling sign for the nation’s economic growth. But the Fed is facing an uptick in inflation as well: a measure of prices paid by businesses and manufacturers rose 1.8 percent last month, more than economists expected.