Core inflation, which excludes energy and food, rose a slight 0.1% in May.
USA retail sales in May recorded their biggest drop in 16 months and consumer prices unexpectedly fell, suggesting a softening in domestic demand that could limit the Federal Reserve's ability to continue raising interest rates this year.
While the markets do not appear to be reacting to the bad attack in Alexandria, it does appear to be reacting modestly to this morning's disappointing May retail sales and Consumer Price Index (CPI) report.
"It won't stop the Fed from hiking interest rates later today, but it increases the downside risks to our forecast that there will be a further two rate hikes in the second half of this year", said Paul Ashworth, chief USA economist at Capital Economics in Toronto.
The unemployment rate hit a 16-year low in May, underscoring steady improvement across the labor market, though wage gains have remained subdued.
American consumers forked out a total of US$473.8 billion (RM2 trillion) for the month, 3.8 per cent above May of past year. Power generation rose by 5.4 per cent in April, down from 14.4 per cent expansion in April previous year.
Sales sank 2.8 per cent at electronics stores, 2.4 per cent at gasoline stations and 1 per cent at department stores, which have struggled with competition from online retailers.
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The Consumer Price Index, which tracks changes in the cost of household goods and services, declined 0.1 per cent compared to April.
Markets widely expect the Fed to raise its benchmark rate by 25 bps and investors will mostly be looking for guidance on the future path of interest rate increases.
Output increased at a 2.1 percent pace in the October-December period. Food prices climbed 0.2% last month and were up 0.9% from a year earlier. The Atlanta Fed is forecasting GDP rising at a 3.0 per cent annualised rate in the second quarter. Monthly prices fell for apparel, airfare, communication and medical care services, the Labor Department said.
The US dollar fell against a basket of currencies on the data, while prices for US Treasuries rose. This rise was owing to 0.3 percent rise in rents and 0.2 percent rise in owner-occupied housing.
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. On a yearly basis, inflation rose by 1.9%, recording its smallest increase since November of a year ago.
The Fed on Wednesday increased borrowing costs for the second time this year, while acknowledging the recent moderation in inflation pressures. And April retail sales were revised upward to a 0.4 percent gain, from 0.3 percent initially reported. This marks the third consecutive decline and leaves prices 0.8 percent lower than one year ago. Sales at building material stores were unchanged, while receipts at clothing stores rose 0.3 per cent.