May retail sales looking solid despite subsiding inflation

Bank of America analysts remain confident that inflation is ex foreign exchange official websiteon a downward trend, despite acknowledging a single data point doesn't signal a definitive shift. Their recent note titled highlights this view.

"May inflation data gives us greater confidence that inflation is decelerating," says analysts. This reinforces their belief that the Federal Reserve will raise interest rates cautiously, with a potential cut by December 2024 being more likely than previously anticipated.

The Fed itself seems to share this sentiment, with projections for rate cuts shifting from three to one this year.

Analysts cite May's disinflationary data as a significant improvement following a concerning first quarter. They now forecast a modest monthly core PCE inflation rise of just 0.16% for May. More importantly, the data suggests a broader trend of disinflation taking hold.

Shifting to retail sales, analysts anticipate a positive report for May. They predict a 0.3% increase in the ex-auto category and a 0.6% rise in the control group.

However, they advise monitoring potential revisions to previous months' data. Analysts also highlight that the recent Memorial Day travel boom may not be fully reflected in retail sales figures, as spending likely occurred in the services sector.

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