By Lucia Mutikani

WASHINGTON (Reuters) – U.S. retail sales barely rose in November as households cut back on purchases of motor vehicles, suggesting some loss of momentum in economic growth in the fourth quarter.

Other data on Wednesday pointed to steadily rising inflation pressures, with producer prices notching their largest increase in five months in November. The moderation in retail sales came after two straight months of strong gains. With incomes rising and household wealth at record highs, the cool-off in retail sales is likely to be temporary.

Against the backdrop of a tightening labor market and perking inflation, the Federal Reserve is expected to raise interest rates later on Wednesday. The U.S. central bank hiked its overnight benchmark interest rate last December for the first time in nearly a decade.

“There is still strong support for consumer spending, namely steady job growth and wages heading higher. Santa will still be coming to town this year.” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

Retail sales edged up 0.1 percent last month after rising 0.6 percent in October, the Commerce Department said. Sales were up 3.8 percent from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales also nudged up 0.1 percent last month after gaining 0.6 percent in October.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic

product. Economists had forecast overall retail sales increasing 0.3 percent and core sales also gaining 0.3 percent last month.

In a separate report, the Labor Department said its producer price index for final demand increased 0.4 percent last month, the largest gain since June, after being unchanged in October.

In the 12 months through October, the PPI rose 1.3 percent, the biggest gain since November 2014. The PPI rose 0.8 percent in the 12 months through October.

A 0.5 percent increase in the cost of services accounted for more than 80 percent of the rise in the final demand PPI last month. The increase, which followed a 0.3 percent decline in October, was the largest since January.

With producer prices pushing higher, overall inflation is expected to steadily move toward the Fed’s 2 percent target.

The dollar fell to a session low against the yen on the retail sales data, while prices for longer-dated U.S. government bonds rose. U.S. stock index futures fell slightly.

The softer-than-expected retail sales numbers last month suggest a slowdown in consumer spending in the fourth quarter, which could see economists trim their GDP forecasts for the period. Still, consumers should continue to support the economy in the fourth quarter.

The Atlanta Fed is forecasting GDP rising at a 2.6 percent annualized rate in the fourth quarter. The economy grew at a 3.2 percent pace in the third quarter.

Last month, auto sales fell 0.5 percent, the largest decline since March, after increasing 0.5 percent in October. Sales at building material stores rose 0.3 percent.

Receipts at clothing stores were flat, suggesting a weak start to the holiday shopping season. Department stores like Macy’s <M.N> and Kohl’s <KSS.N> are facing intense competition from online retailers such as Amazon <AMZN.O>, which have snatched a large chunk of the market share.

Sales at online retailers gained 0.1 percent last month after surging 1.4 percent in October. Receipts at restaurants and bars increased 0.8 percent, while sales at sporting goods and hobby stores fell 1.0 percent. Receipts at service stations gained 0.3 percent after jumping 2.5 percent in October.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)