‘To some extent, this new weakness in price inflation is due to competitive pressures rather than weak demand, so the Fed can afford to discount it.’ – Paul Ashworth, Capital Economics
Consumer prices in the United States advanced last month but less than analysts expected. The Labour Department reported on Friday that its CPI rose 0.2% in April, following the preceding month’s drop of 0.3% but missing expectations for a 0.3% gain. Furthermore, the so-called core inflation rate climbed 0.1% last month, compared to the previous month’s fall of 0.1%, whereas analysts anticipated an increase of 0.2%. However, both figures pointed to a tightening labour market and solid inflation growth, suggesting that the Federal Reserve will likely raise interest rates at its June meeting. April’s inflation rebound was mainly attributable to the oil price rebound. Other data released by the Commerce Department showed retail sales rose 0.4% in April, following the prior month’s upwardly revised gain of 0.1% and falling behind forecasts for a 0.6% increase. Meanwhile, core retail sales, which exclude volatile items, climbed 0.3%, unchanged from the preceding month’s upwardly revised reading, while analysts anticipated a 0.5% climb. According to the Atlanta Fed, the economy is set to expand 3.6% in the Q2 of 2017.
