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US: Import prices and retail sales higher than expected

Wed, May 14 2008, 08:15 GMT
by KBC Market Research Desk

KBC Bank


In April, import prices surged to another record high at 15.4% Y/Y on the back of higher oil prices and a weakening dollar. However, also excluding petroleum, import prices were still up 1.1% M/M and 6.2% Y/Y, the highest since the late 80s. The strong increases the import prices put the risk on the upside for today’s CPI report.

Retail sales fell 0.2% M/M in April, but were up 0.5% M/M excluding car sales and even up 0.6% M/M excluding car and gasoline sales. The better than expected outcome was mainly due to higher sales of electronics and building materials. This suggests the US consumer is still quite resilient, although the underlying trend remains downwardly oriented. On a three-month annualized basis, sales are down 1.4%.


Other: UK inflation rises to 3%

In the UK, the headline inflation rate unexpectedly jumped from 2.5% Y/Y to 3% Y/Y in April. The increase was more broad-based compared to the previous months as also the core inflation rate rose from 1.2% Y/Y to 1.4% Y/Y. Coming on the heels of record high PPI on Monday, it’s clear that the Bank of England will face the increasingly difficult task to keep inflation under control, while at the same time preventing the economy from falling off a cliff. Today’s inflation report will indicate whether the Bank still sees some room for lower rates.

Published on  Wed, May 14 2008, 08:22 GMT

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This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

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