US Economy: Record low inflation, Retail sales rising, Industrial production speeds up

US Economy: Record low inflation, Retail sales rising, Industrial production speeds up


In the USA, the price surge in June weakened more than expected. Consumer prices rose by only 1.6 per cent on the previous month, as the US Department of Labor announced on Friday. This is the weakest inflation since October. Analysts had averaged a smaller decline to 1.7 percent. In May, the inflation rate was 1.9 percent and 2.2 percent in April.

The core inflation (CPI), which excludes energy and food prices, remained as expected at 1.7 percent at the previous month’s level. Compared to the previous month, the price level remained unchanged in June. Compared to the previous month, the core tax rate was 0.1 percent.

The Fed’s chief, Janet Yellen, had recently pointed out that inflation is currently the greatest uncertainty factor in terms of future monetary policy and stressed the importance of keeping an eye on further developments. A weak inflation is tending towards a more tight monetary policy.

“On the basis of June’s data, it is getting harder for the Fed to continue claiming that this is a temporary drop-off,” said Paul Ashworth, chief U.S. economist at Capital Economics.

US industrial production rose slightly more than expected in June. Production rose by 0.4 per cent compared to the previous month, the Fed reported on Friday. Economists had only expected an increase of 0.3 percent.

In the previous month, production rose by a revised 0.1 percent. Here a stagnation was first determined. As expected, production in the narrower manufacturing sector rose by 0.2 percent in June.

Capacity utilization in industry was lower than expected in June. It rose by 0.2 percentage points to 76.6 percent as of the previous month. Economists had, however, reckoned with an increase to 76.8 per cent.

“This highlights how much more efficient US production has become – growing at such a strong rate despite relatively subdued energy prices,” noted analysts at ING.

The US retail sales fell surprisingly in June. They were down 0.2 percent on the previous month, the Commerce said on Friday in Washington. Bank economists, on the other hand, expected an increase of 0.1 percent. In the previous month, revenues fell by a revised 0.1 percent (initially: -0.3 percent).

Even without fluctuations in car purchases, sales fell by 0.2 percent in June. Here, an increase of 0.2 percent was forecast. Revenue in this accrual decreased by 0.3 per cent in May.

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