Weak US data dims rate hike prospects

CNC
Added On July 16, 2017

INTRO:
 
The U.S. inflation continued to fall in June, spurred on by a dip in retail sales.
 
The soft figures will prove a headache for the Federal Reserve, which is hoping to boost interest rates by the end of the year.
 
PKG:
 
Consumer prices remained unchanged in June, indicating inflation may remain stuck below the U.S. central bank's target for a long time.
 
The Consumer Price Index, a main gauge of inflation, dropped 0.1 percent in May.
 
On a year-on-year basis, the index increased 1.6 percent, slowing down from the 1.9 percent increase seen in May.
 
The news will be a blow to the U.S. Federal Reserve, whose officials have viewed the recent dip in prices as a temporary blip.
 
On Wednesday, Fed Chair Janet Yellen told lawmakers that the recent cool-off in inflation was partly the result of "a few unusual reductions in certain categories of prices".
 
Meanwhile, new data from the Commerce Department showed retail sales fell 0.2 percent last month, dragged down by declines at service stations, clothing stores and supermarkets.
 
With consumer spending a major driver of U.S. economic growth, June's figures dampen expectations of a strong second quarter.
 
The U.S. economy grew at an annual rate of 1.4 percent in the first quarter of this year. 
 
According to latest forecast from the Federal Reserve Bank of New York, the U.S. economy is expected to expand at a rate of 1.9 percent in the second quarter.