Washington - US retail sales climbed an unexpected 1 per cent in May from the previous month, the Commerce Department said Thursday, as consumers began spending tax rebates handed out by the US government to help kickstart a sluggish US economy.

The Commerce Department also revised April's figure to a 0.4-per- cent increase, after earlier reporting a 0.2-per-cent drop.

The numbers suggest retailers are benefiting from a series of drastic interest rate cuts by the Federal Reserve, as well as the 130-billion-dollars worth of tax rebates that began reaching consumers in early May.

Surging energy prices fuelled strong gains in sales at petrol stations, while tax rebates helped the bottom line of electronics and department stores. Retail sales were up
2.5 per cent from May 2007.

The new figures could ease fears that the world's largest economy has entered a recession. Fed Chairman Ben Bernanke on Monday said downside risks to the economy had softened. (dpa)