U.S. retail sales surged 2.3 percent in January, nearly triple the expected increase and the largest gain since May 2004, a government report showed on Tuesday, cementing expectations for higher interest rates.

Excluding demand for cars and parts, retail sales were up 2.2 percent last month in the largest monthly gain in more than six years, the U.S. Commerce Department said.

Both overall sales and sales outside the auto sector were far stronger than Wall Street had expected, and analysts said warm winter weather and gift card sales spurred shopping, setting the stage for a pullback in February.

Analysts had forecast a 0.8 percent overall increase and a 0.7 percent gain excluding cars, and the larger than expected surge prompted them to revise up expectations for first-quarter economic growth after the fourth-quarter?s anemic 1.1 percent annualized gain.

The soaring sales sent the U.S. dollar higher against the euro and yen, while the stock market looked set to open higher. U.S. Treasury bond prices extended their losses as investors bet the surging consumer demand would increase the likelihood of more interest rate increases from the Federal Reserve.

The Fed has already raised borrowing costs 14 times since June 2004 in a bid to head off inflation pressures, and is expected to raise the overnight federal funds rate again in March, to 4.75 percent.

The higher-than-expected sales growth in January was offset slightly by a downward revision to December?s data. Sales were up just 0.4 percent in December, rather than the initially reported 0.7 percent gain. The rise in sales outside the auto sector was unrevised at 0.2 percent in December.

Sales of motor vehicles and parts surged 2.9 percent in January, building on December?s 1.2 percent gain, while sales at gasoline stations rocketed 5.5 percent higher. When both cars and gasoline are excluded, retail sales were up 1.8 percent in January, the largest increase since March 2004.

Demand was firm across nearly all major retail categories in January.