U.S. retail sales showed surprising strength during December, but demand the month before was lowered sharply.

Separate reports showed that U.S. import prices also rose more than expected last month, boosted by a recovery in imported petroleum prices, and business inventories rose modestly in November.

Retail sales increased by a seasonally adjusted 0.9%, the U.S. Commerce Department said today. November sales rose by 0.6%, revised lower from a previously reported 1.0% advance.

Wall Street economists had expected overall sales rising 0.7% in the final month of fourth-quarter 2006.

Unadjusted, sales for 2006 climbed 6.0% from 2005. That was weaker than the gains of 6.9% in 2005 and 6.5% in 2004, yet stronger than 4.3% in 2003.

Sales at auto and parts retailers increased 0.3% in December, after remaining flat in November. Outside the auto sector, all other retail sales climbed 1.0%.

Meanwhile, U.S. import prices rose 1.1% last month and were revised to a 0.5% increase for November, the Labor Department said today. Labor had originally reported import prices up 0.2% in November.

The December increase was the largest since a 1.8% jump in May last year and larger than economists had expected.

Overall U.S. export prices rose 0.1% last month. Export prices grew 4.6% for the year 2006.

Separately, it was reported that U.S. business inventories grew modestly again in November as stockpiles of car dealers and home improvement retailers fell.

Inventories rose by 0.4% to a seasonally adjusted US$1.368 trillion, after a revised 0.2% increase in October, the U.S. Commerce Department said today. Originally, October stocks were seen 0.4% higher. Economists had expected a 0.4% gain in November.