US: Retail sales and CPI in focus – BMO CM

Sal Guatieri, Senior Economist at BMO Capital Markets, suggests that the simultaneous release of retail sales and CPI for the month of April will be in focus for today’s US session.

Key Quotes

“Lower gasoline and used-vehicle prices will subdue the CPI in April after a prior decline. An expected 0.1% increase could carve the yearly rate to 2.2%, well off the five-year high of 2.7% reached in February. Meantime, rising rent and prescription drug costs suggest core prices will reverse higher, while still holding the annual rate steady at 2.0%. The Fed is targeting 2% inflation, and appears to have succeeded, though its preferred core PCE rate has dipped recently to 1.6%.”

“Firmer auto sales and some rebound in building materials (especially with lumber prices spiking) should help retailers ring up their first increase in receipts since January. Chain-store sales popped higher, benefitting from the Easter holiday falling in April this year. Look for retail sales to rise 0.4%, and slightly less excluding autos. The gain should anchor a much-better quarter for consumers after Q1’s stumble.”