Sales at U.S. retailers rose slightly less than expected in December while underlying inflation remained calm, government reports showed on Friday.

Despite the modest rise in December, a key shopping month, retail sales for all of 2010 reversed two years of contraction and posted the biggest gain in more than a decade.

The reports, which pointed to steady if modest recovery with scant price pressures, are unlikely to budge the U.S. Federal Reserve from its $600 billion bond buying program aimed at accelerating growth and lowering the lofty jobless rate.

Total retail sales climbed 0.6 percent, advancing for the sixth straight month as sales declines at electronics and general merchandise stores were offset by gains in gasoline and building materials sales, the Commerce Department said. Analysts polled by Reuters were expecting sales to gain 0.8 percent.

Excluding autos, sales rose 0.5 percent. Analysts had forecast a 0.7 percent increase.

Brian Jones, senior economist at Societe Generale in New York, called the retail sales report mildly disappointing.

There is some evidence that the year-end winter storm may have impacted some areas and held down the headline figure, he said, adding that the figure was likely to reduce the consumption portion of fourth-quarter growth by a small amount. But, for the quarter as a whole, consumer retail sales were solid.

Total sales for the 12 months of 2010 were up 6.6 percent from the previous year after a 6.5 percent drop in 2009. It was the largest 12-month gain in sales since 1999.

Sharply higher prices at the pump pushed overall consumer prices up to their fastest pace in a year and a half, though core prices, which strip out volatile food and energy costs, barely budged, a Labor Department report showed.

Overall consumer prices rose a slightly more-than-expected 0.5 percent in December, but excluding volatile food and energy costs, retail prices rose just 0.1 percent, in line with expectations.

Overall consumer prices rose 1.5 percent from the same month a year ago, while core consumer prices gained 0.8 percent in 2010, the slowest calendar year pace since the department started keeping records in 1958.

Stock index futures added to losses after the data, while Treasuries pared losses on the sales data. The euro gained against the dollar on the retail sales report.

(Reporting by Mark Felsenthal, Additional reporting by Corbett B. Daly in Washington and Richard Leong in New York; Editing by Andrea Ricci)

Retail Inflation