Sales at U.S. retailers rose more strongly than expected in March, pointing to a broadening of the manufacturing-led economic recovery as inflation pressures remained muted.

The Commerce Department said on Wednesday total retail sales jumped 1.6 percent, the largest increase since November as consumers stepped up purchases of vehicles and wide range of goods. January sales were revised up to a 0.5 percent rise from 0.3 percent.

Analysts polled by Reuters had forecast retail sales increasing 1.2 percent last month.

Separately, Labor Department data showed consumer prices rose 0.1 percent last month, matching economists' expectations for a tame reading and giving the Federal Reserve leeway to maintain ultra-low interest rates.

The consensus has been the consumer has not yet come back. I guess (the retail data) should neutralize some of those worries. The question that will remain is how sustainable is the consumer recovery going to be, said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.

U.S. stock index futures added to gains after retail sales data, while U.S. Treasury debt prices pared early losses. The U.S. dollar extended gains versus yen.

Consumers are defying high unemployment and tight access to credit to spend, offering hope that the recovery from the worst economic downturn in 70 years will continue when the lift from government stimulus and the swing in the inventory cycle ebbs.

Growing confidence in the recovery, particularly brightening job market prospects, is encouraging households to tap into the savings to fund purchases of goods, including luxury items.

Motor vehicle and parts purchases surged 6.7 percent last month, the biggest rise since October, after dropping 1.9 percent in February.

Excluding motor vehicles and parts, retail sales rose 0.6 percent in March after rising 1.0 percent the prior month as a combination of an early Easter holiday and warm weather boosted receipts at clothing stores. Economists had expected a 0.5 percent gain.

Core retail sales, which exclude autos, gasoline and building materials, rose 0.5 percent after increasing 1.2 percent February. Core sales correspond most closely with the consumer spending component of the government's gross domestic product report.

The Federal Reserve has pledged to keep its benchmark interest rate unusually low for an extended period to nurture the recovery. Even as spending gathers momentum, there are no signs of inflation picking up.

Core consumer prices, which exclude volatile food and energy prices were unchanged in March after rising 0.1 percent in February, the Labor Department said. Economists polled by Reuters had expected a 0.1 percent rise in core CPI.

There's no inflation in the economy because we have still a lot of slack in the work force and wages are not going up materially. Retailers cannot pass on higher costs to consumers, said Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton, New Jersey.

Clothing and clothing accessories sales increased 2.3 percent, while building materials and garden equipment climbed 3.1 percent - the largest advance since November 2007.

Receipts at sporting goods, hobby and book stores rose 1.0 percent in March. Sales at electronics and appliance stores, however, fell 1.3 percent and receipts at gasoline stations slipped 0.4 percent.

(Reporting by Lucia Mutikani and Emily Kaiser; Additional reporting by Richard Leong in New York; Editing by Andrea Ricci)

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