- US retailers cut prices to clear heavily stocked inventory.
- The services industry kept inflation hot as prices went above pre-pandemic levels.
- The CPI data to come out on Friday kept investors edgy.
Amid the rising inflation in the US, big retailers have been slashing prices to clear their heavily stocked inventory. Firms like Walmart Inc. (NYSE: WMT) and Target Corp (NYSE: TGT) have cut their prices considerably.
However, prices in the services industry remained high, adding to inflationary pressure. For instance, hotel revenue continues to grow as daily room rates rise above the pre-pandemic levels. Airlines fares have also risen since April at a very steep level of 33% annually.
Eating out has also become costly. There is a surge in the price of restaurant meals. The service industry has also witnessed a high wage growth and high demand for labor.
© 1000words | Megapixl.com
May CPI data could show no let-up in inflation
According to economists interviewed by Reuters, the May consumer inflation data, which will come on Friday, is likely to reveal prices were rising by 8.3% annually.
The four-decade high inflation has cut the Americans’ purchasing power. Besides higher food costs, gasoline prices also increased. Gasoline prices are now close to US$5 a gallon.
Goods inflation has settled as expected as demand fell, and there seems to be an improvement in supply-chain woes, Reuters reported. The report said that shipping costs have also come down, and port backlogs are being cleared.
Citing an Adobe survey on Thursday, it further said that online goods prices have come down at an annual rate of 2% in May, from a peak of 3.6% in March. Of the 18 categories the company surveyed, prices for 10 segments fell.
Investors seem to be on edge waiting for the CPI data on Friday. Economists expect the consumer prices to rise by 0.7% MoM in May and the core CPI to increase by 0.5% in the month.