WASHINGTON, May 12 (Reuters) - U.S. retail sales increased broadly in April while consumer prices rebounded, pointing to an acceleration in economic growth and steadily rising inflation that could keep the Federal Reserve on track to raise interest rates next month.
On Friday, May 12, 2017, the Labor Department reports on US consumer prices for April.
The Labor Department says consumer prices rose 0.2 percent after a 0.3 percent drop in March, which was the biggest fall in more than two years.
Sales less cars and petrol, meanwhile, increased by 0.3% versus the 0.4% of the previous year.
The food index increased 0.2%, its fourth consecutive increase. The dollar was weaker against a basket of currencies. The Fed has raised interest rate in March.
Stocks futures weakened on the reports, and Treasury yields, which move inversely to prices, fell. But since December 2015, it has been cautiously raising rates, moving its key rate up three times in small quarter-point steps. That contributed to holding down first-quarter GDP growth to a 0.7% rate.
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Consumer prices in the United States sprang up moderately in April as energy prices resumed their climb after a sharp decline in March. The inflation in meat and fish prices also reduced from 2.96 per cent in March to 1.90 per cent in April. While, for cereals and products, the rate of increase in price in April was 5.06 per cent, lower than 5.38 per cent in March. Over the past 12 months, food prices are up 0.5%.
The U.S. Department of Commerce announced that retail sales had increased in April 0.4% after it revised figures for a gain of 0.1% for March. Core inflation at the wholesale level, which excludes food, energy and trade services, was up 0.7 percent in April and 2.1 percent over 12 months. But prices declined in several major categories, including apparel (down 0.3%), medical care commodities (0.8%) and used vehicles (0.5%).
In April, rental costs increased 0.3 percent after a similar gain in March.
"The owners' equivalent rent component had been rising at 0.3, and it has only averaged 0.2 in the last two months".
Market expectations for a June rate hike were also softer at 73.8 percent, according to the CME Group's FedWatch tool.
Gas prices, which drove down the energy category last month, rose 1.2 percent after declining 6.2 percent in March and 3 percent in February. Still, April's increase was above the 1.8 percent average annual increase over the past decade.
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