Drops Seen in Retail Spending, Confidence, Prices

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etail spending dropped 1.2% in September, the Commerce Department reported Friday, although the movement is up 0.1% if auto sales are disregarded.

The spending drop was the largest in 10 months and confirmed a drop in consumer sentiment seen in the the latest University of Michigan survey of households which produced an index of 86.7, down from 87.1, the Associated Press saidF.

The spending pullback in September reflected consumers' skittishness about a possible war with Iraq, the rollercoaster stock market and a sluggish jobs market, economists say.

At the same time, the producer price index, which measures prices paid to the nation's factories, farms and refineries barely rose in September, the Labor Department said on Friday, adding to evidence that there is little inflation in the economy.

The closely watched "core" PPI, which strips out volatile food and energy costs, also rose 0.1% in September following a 0.1% drop, Reuters reported.

The PPI has fallen 1.9% over the past 12 months. The core PPI has dropped a record 0.4% during the same period.

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