Inflation is up — and for once, that's being taken as good news.

Consumer prices rose 0.3 percent in July, the Labor Department said, the largest increase since last August to the Consumer Price Index. That's just one month's results, but it could ease some fears that the economy will slip into deflation.

The government also announced this morning that retail sales increased 0.4 percent in July, and the consumer confidence index kept by Thomson Reuters and the University of Michigan went up in August. Improving confidence makes it less likely that a slump in consumer spending, which accounts for about 70 percent of the economy, will derail the economy

The rise in the Consumer Price Index was the largest since last August. Energy prices jumped for the first time in five months.

Excluding food and energy prices, the core index increased 0.1 percent in July. The cost of housing, clothes, and used cars and trucks all rose. Over the past year, consumer prices rose 1.2 percent. That's up slightly from last month's 1.1 percent pace but still a mild increase.

Prices are rising at the slowest pace in 44 years, well below the Federal Reserve's inflation target. Core prices moved up 0.9 percent in the past year.

On the retail front, the July increase in sales followed declines of 0.3 percent in June and 1 percent in May. Sales had surged 2.1 percent in March but since that time consumer spending, which accounts for 70 percent of the economy, has weakened.

The major bright spot was a 1.6 percent rise in sales of motor vehicles and parts. It was the best showing since a 6.6 percent surge in March.

Summer promotions and easier credit lured shoppers back to car buying last month. Nissan, Toyota, Volkswagen, Subaru and Kia reported the biggest gains. The industry sold more than 1 million cars and light trucks. That's 5.1 percent higher than in July 2009. Last year auto sales fell to the lowest level in three decades.