U.S. retail sales excluding cars rose a modest 0.2 percent in July, as declining gasoline prices reined in overall sales growth, according to data from SpendingPulse released on Friday.

The seasonally adjusted gain equaled June's 0.2 percent increase, according to SpendingPulse, the retail data service of MasterCard Advisors, an arm of MasterCard Worldwide.

We are still growing but it's pretty modest, said Michael McNamara, SpendingPulse's vice president of research and analysis.

The housing slump, exacerbated by a worsening subprime mortgage sector, also depressed sales on categories such as furniture and building materials last month.

While overall consumer spending has slowed sharply from their earlier robust level, there have been some retail segments like electronics and general merchandise, which posted solid growth in July, McNamara said.

Further erosion in retail sales would harm the economy with consumers generating more than two-thirds of overall economic activities, according to economists.

Sales growth without autos and gasoline climbed 0.5 percent in July, a tad below June's 0.6 percent.

Earlier this week, the government reported that U.S. retail gasoline price averaged $2.84 a gallon last week, the lowest level since early April.

There are still areas of strength that are helping us to counter the housing issue, McNamara said.

SpendingPulse's July figure on core retail sales, which exclude cars, gasoline and building materials, showed a 0.7 percent increase versus a 0.8 percent jump in June.

Meanwhile, the U.S. Commerce Department will release its own July survey of retailers on Monday. The latest median forecast of the government's reading on overall retail sales was a 0.3 percent increase, and ex-auto sales a 0.4 percent rise, according to economists polled by Reuters.

The SpendingPulse data are derived from the aggregate sales in the MasterCard U.S. payment network, coupled with estimates on all other payment methods including cash and check.

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