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May 15 - 09:55 AM

CIBC: Reaction to US CPI and Retail Sales for April; Fed Powell Will 'Breathe a Sigh of Relief'

By eFXdata  —  May 15 - 09:00 AM

Synopsis:

CIBC provides a comprehensive analysis of the latest US CPI and retail sales data for April, indicating a shift towards more moderate inflation and consumer spending patterns, which could influence Federal Reserve policy decisions.

Key Points:

  • Inflation Trends: April's Core CPI increased by 0.3% month-on-month, aligning with consensus expectations and showing a slight decrease from previous months. Headline inflation also matched projections at 0.3%, indicating a stabilization in price pressures.
  • Services and Goods Prices: Services inflation slightly cooled, especially in transportation, while core goods prices saw a minor decline of 0.1%.
  • Retail Sales Data: Retail sales were unexpectedly flat in April, with a notable contraction in the control group that feeds into GDP calculations. This suggests a cautious start to Q2 consumer spending.
  • Economic Outlook: Despite the slowdown in April, the residual strength from Q1 and ongoing services demand are expected to maintain a steady economic growth rate.

Conclusion:

Today’s CPI and retail sales data should provide some comfort to the Federal Reserve, showing signs of easing inflationary pressures and a tempering of consumer spending. This could support the Fed's current cautious approach to monetary policy as it seeks additional data to confirm these trends.

Source:
CIBC Research/Market Commentary

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