US Inflation Demurs as Fed Hike Expected

Retail inflation eases to 2.99% in April

Retail inflation eases to 2.99% in April

The Fed is expected to increase borrowing costs later on Wednesday, but the signs of moderate consumer spending and retreating inflation pressures could worry policymakers who have previously viewed the softness as transitory.

The U.S. Labor Department said Wednesday that the consumer price index edged down 0.1% last month following a small 0.2% increase in April.

Most retail names are down roughly 1 percent on the weaker-than-expected retail sales.

In a separate report, the Commerce Department said retail sales fell 0.3 percent last month amid declining purchases of motor vehicles and discretionary spending after a 0.4 percent increase in April.

Economists have said they think consumer spending, which accounts for about 70 per cent of US economic activity, will pick up in the spring and summer after a slow start to 2017.

"The latest inflation data have undoubtedly helped the case of officials arguing for waiting more than three months for the next move", said Jim O'Sullivan, chief USA economist at High Frequency Economics in Valhalla, New York. By then, the Fed's forecast would put its key policy rate at 3 percent.

Hawaii Becomes First State to Pass Legislation Supporting Paris Agreement
Unfortunately, that appears to be where President Trump's decision to pull out of the Paris climate accord has landed us. David Ige , shown here in 2014, has signed a bill to implement goals of the Paris Agreement in his state.

"Clearly officials will be mindful of incoming inflation trends in the coming months before greater confidence can be made with second half of the year policy normalization plans", said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

The likelihood of a rate hike in September has significantly weakened, however, with futures rates showing just a 17 percent chance of an increase, down from 28 percent before the data release on Wednesday, according to CME Group's FedWatch.

Medical services such as the cost of doctor's visits dipped 0.1 percent in May but have risen 2.5 percent over the past 12 months. The Fed still foresees prices, as measured by a gauge tied to consumer spending, rising 2 percent in 2018 and 2019, achieving its target.

Falling US gasoline prices drove inflation and retail sales down in May, defying expectations and raising more questions about the economy and the pace of interest rate increases this year.

In May, energy prices fell sharply to reflect lower oil prices. Prices for U.S. Treasuries rallied, while stocks on Wall Street were little changed. On a year-on-year basis, core inflation came in at 1.7 percent, which is the lowest reading in two years, noted TD Economics in a research report.

American consumers forked out a total of US$473.8 billion (RM2 trillion) for the month, 3.8 per cent above May of a year ago.

Israel greenlights largest West Bank settlement construction in 25 years
The last round of peace talks between Israel and the Palestinians collapsed in 2014, mainly over the expansion of the settlements. Almost 400,000 Jewish settlers are estimated to be living in the West Bank along with 2.8 million Palestinians.

In the 12 months through May, the CPI increased 1.9 percent, that was the smallest increase since last November and followed a 2.2 percent gain in April.

Economists had projected CPI to be flat, and retail sales to rise 0.1 percent.

Gasoline stations saw sales fall 2.4 per cent, the biggest dip since February of a year ago. Food prices rose for a fifth straight month.

Retail sales were still down 0.3 per cent even after excluding the more volatile food and cars categories, the first decline for the core measure since August. Receipts at service stations dropped 2.4 per cent, the largest decline since February 2016.

Despite the weak report, analysts noted that April's sales numbers were revised significantly upward, especially in the "control" group of goods, which excludes gasoline, cars and building materials. Department store sales are being undercut by online retailers, led by Amazon.com AMZN.O . Sales at electronics and appliance stores plunged 2.8 per cent, the largest drop since March 2010. This marks the third consecutive decline and leaves prices 0.8 percent lower than one year ago.

Trump will not block ex-FBI chief Comey's testimony -White House
He reportedly has met with Comey to discuss the probe, and Comey reportedly sought his approval to testify before lawmakers. Some legal analysts had questioned whether Trump could have blocked Comey's testimony via executive privilege in any event.

Recommended News

  • US joins battle as Philippines takes losses in besieged city

    US joins battle as Philippines takes losses in besieged city

    Philippine military spokesman Lieutenant Colonel Jo-Ar Herrera said USA personnel were "just providing technical support". Until now there had been no confirmation USA forces were assisting in the battle for Marawi City, now in its third week.

    Out-of-nowhere Ostapenko to face Halep for French Open title

    Jelena Ostapenko hit a double-fault on set point as Timea Bacsinszky leveled at 1-set apiece in the French Open semifinals. Ostapenko trained as a ballroom dancer for seven years but seems more suited to thrashing the fluff off tennis balls.
    New Smart Speaker Expected as Apple Kicks Off Worldwide Developers Conference

    New Smart Speaker Expected as Apple Kicks Off Worldwide Developers Conference

    CEO Tim Cook said Amazon Prime Video, which includes original series like "Man in the High Castle", would be added to Apple TV. Against other smart home assistants, the HomePod's targets are different from ostensible competitors like the Amazon Echo.
  • Shale oil boom to hurt OPEC well into 2018

    Shale oil boom to hurt OPEC well into 2018

    USA crude fell 3.57 percent to $44.80 per barrel and Brent was last at $47.01, down 3.51 percent on the day. Analysts estimated, on average, that crude stocks fell 2.7 million barrels in the week ended June 9.
    Apple's HomePod speaker pumps up the volume on tech rivals

    Apple's HomePod speaker pumps up the volume on tech rivals

    The moves announced Monday escalate Apple's technological battle of wits with Google , Amazon, Microsoft and Facebook. The company also rolled out tools for developers to create augmented reality applications for iPhones and iPads.
  • Cavaliers-Warriors set for ultimate Finals rubber match

    Cavaliers-Warriors set for ultimate Finals rubber match

    In the 2015 Finals , the Cavaliers had star point guard Kyrie Irving for just one game due to injury and Kevin Love not at all. I'm not gonna go through a long buildup and tell you my pick at the end of some back and forth analysis.
    Report Claims Manchester United Will Not Offer Zlatan Ibrahimvoic a New Contract

    Report Claims Manchester United Will Not Offer Zlatan Ibrahimvoic a New Contract

    Manchester United are not expected to offer striker Zlatan Ibrahimovic a new contract when his current deal expires on 30 June. Manchester United are unlikely to offer Zlatan Ibrahimovic a new contract meaning he should depart Old Trafford this summer.

    New smart speaker expected as Apple kicks off conference

    Safari isn't the only browser cracking down: The next version of Google Chrome will block ads on sites with poor ad experiences. Like the Amazon Echo and Google Home , the HomePod will play music while also helping people to manage their lives and homes .
  • Apple allows users to tip content creators

    Apple allows users to tip content creators

    This new way of generating revenue will help app developers to institute digital tip jars. To reach 200 paying subscribers, the app only needs to trick 0.4% of users, Lin reasons.

    Puerto Ricans parade in New York, back statehood

    Puerto Rico was handed over to the U.S. at the end of the Spanish-American war in 1898 as a form of war booty. Ricardo Rossello declared, after the island voted to become the 51st USA state in a non-binding referendum.
    Hillary Refuses to Take Blame for Election Loss

    Hillary Refuses to Take Blame for Election Loss

    Clinton's scathing tweet was clearly a reference to the now-infamous " covfefe " tweet Trump sent out earlier in the week. Clinton said the NYT coverage of her private email server - the paper broke the story - was disproportionate.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.