 "US retail sales rise 0.4% in April; consumer prices rebound")
US retail sales increased broadly in April while consumer prices rebounded, pointing to an acceleration in economic growth and steadily rising inflation that could keep the Federal Reserve on track to raise interest rates next month.
The reports on Friday added to data on the labour market in suggesting that economic activity picked up at the start of the second quarter after almost stalling in the first three months of the year.
The Commerce Department said retail sales rose 0.4 per cent last month after an upwardly revised 0.1 per cent gain in March. Sales rose 4.5 per cent in April on a year-on-year basis.
Economists had forecast overall retail sales increasing 0.6 per cent last month. Excluding automobiles, gasoline, building materials and food services, retail sales gained 0.2 per cent after advancing 0.7 per cent in March.
These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Prices of US Treasuries extended gains after the data, while US stock index futures slightly added to losses. The dollar was weaker against a basket of currencies.
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Fed funds futures show traders see a 78.5 per cent chance of a rate hike at the Fed's June 13-14 policy meeting. But the likelihood that the US central bank will raise rates twice before the end of the year fell after Friday's data.
Consumer spending, which accounts for more than two-thirds of US economic activity, increased at a 0.3 per cent annualised rate in the first quarter, the weakest pace since the fourth quarter of 2009. That contributed to holding down first-quarter GDP growth to a 0.7 per cent rate.
In a separate report on Friday, the Labour Department said its Consumer Price Index rose 0.2 per cent after dropping 0.3 per cent in March. The rise in prices suggested that March's drop, which was the first in 13 months, was an aberration.
In the 12 months through April, the CPI increased 2.2 per cent. While that was a slowdown from March's 2.4 per cent increase, it still exceeded the 1.7 per cent average annual increase over the past 10 years.
Gasoline prices jumped 1.2 per cent after falling 6.2 per cent in March. Food prices rose 0.2 per cent, with the cost of food consumed at home increasing 0.2 per cent amid a surge in prices of fresh vegetables.
The so-called core CPI, which strips out food and energy costs, edged up 0.1 per cent last month, reversing March's 0.1 per cent dip. The monthly core CPI was restrained by declines in the prices of wireless phone services, medical care, motor vehicles and apparel.
TIGHTENING LABOUR MARKET
In April, rental costs increased 0.3 per cent after a similar gain in March. Owners' equivalent rent of primary residence rose 0.2 per cent, matching March's increase.
Signs of firming economic growth could bolster expectations of a Fed rate hike next month. Consumer spending is being supported by a tightening labor market, marked by an unemployment rate at a 10-year low of 4.4 per cent.
The core CPI increased 1.9 per cent year-on-year, the smallest gain since October 2015, after rising 2.0 per cent in March. Still, April's increase was above the 1.8 per cent average annual increase over the past decade.
Motor vehicle sales increased 0.7 per cent in April after declining 0.5 per cent in March. Sales at building material stores rebounded 1.2 per cent last month after slumping 1.7 per cent in March. Receipts at electronics and appliance stores increased 1.3 per cent, adding to March's 2.2 per cent jump.
But sales at clothing stores fell 0.5 per cent. Department store retailers have been hurt by declining traffic in shopping malls and increased competition from online retailers, led by Amazon.com.
Retail giant Macy's Inc on Thursday reported a 4.6 per cent drop in sales in the first quarter. Sales at online retailers jumped 1.4 per cent in April.Receipts at restaurants and bars gained 0.4 per cent while sales at sporting goods and hobby stores accelerated by 0.6 per cent.