Baby, it’shere.

Frugal shoppers cut back on their spending at the nation’s retailers by 0.4 percent in December, the most in six months, in a gloomy report that fanned fears of a recession.

The Commerce Department reported Tuesday that the drop in retail sales, which followed a brisk 1 percent gain in November, marked the worst showing since June, when merchant sales declined by 0.8 percent.

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Excluding sales of automobiles, which can swing widely from month to month, sales at all other retailers also fell by 0.4 percent in December, the biggest decline since August.

The report was much weaker than many economists were expecting. They were forecasting overall sales to be flat last month and for sales — excluding autos — to dip by 0.1 percent.

Odds that the country could slide into a recession this year have grown.

Andhere.

Wholesale inflation shot up in 2007 by the largest amount in 26 years even though falling gasoline costs allowed price pressures to moderate in December.

The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.

The year ended on a more positive note, with wholesale prices falling by 0.1 percent in December. That reflected decreasing costs at the time for gasoline and other energy products. It was a significant slowdown after prices had soared by 3.2 percent in November, which had been the biggest one-month increase in 34 years.