U.S. Retail Sales, Consumer Prices Slump In March

U.S. retail sales fell for a second straight month in March and consumer prices dropped for the first time in 13 months, supporting views that the economy lost significant momentum in the first quarter. But with the labor market near full employment, the decline in both sales and consumer prices is likely to be temporary and probably does not change expectations that the Federal Reserve will raise interest rates again in June. “Some Fed officials will be disturbed by the unexpected drop back in core inflation, but this won’t prevent a June rate hike,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto. The Commerce Department said on Friday retail sales dropped 0.2 percent last month after a 0.3 percent decrease in February, which was the first and biggest decline in nearly a year. Compared to March last year retail sales increased 5.2 percent. Economists polled by Reuters had forecast retail sales slipping 0.1 percent last month. Excluding automobiles, gasoline, building materials and food services, retail sales rebounded 0.5 percent after falling 0.2 percent in February. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Read more at Reuters.