After markets rose this week and the S&P 500 entered bull market territory, next week will bring crucial information on inflation and the Federal Reserve’s decision on interest rates. The Labor Department will release its latest figures on consumer prices on Tuesday, with producer price data set to follow on Wednesday. The Federal Reserve will also kick off its two-day policy meeting on Tuesday, with a decision on whether to increase or pause interest rate hikes due on Wednesday. We’ll get an update on retail sales, as well as consumer sentiment later in the week. Oracle, Adobe, Kroger, and Lennar Corporation, will be among the companies reporting earnings.
Fresh Inflation Reports
On Tuesday, we’ll get the Labor Department’s latest Consumer Price Index (CPI) for May. The CPI is expected to have risen 0.2% in May, slowing slightly from a 0.4% rise in April. It’s projected to come in at an annual rate of 4.1%, down from 4.9% the month before. The core CPI, which excludes more volatile food and energy prices, is projected to have increased 0.4% last month and 5.3% year-over-year, slowing from 5.5% in April. The May Producer Price Index (PPI), which tracks wholesale inflation, will follow on Wednesday. Producer prices are expected to have fallen 0.1% in May after a 0.2% gain in April, while the annual rate is projected to slow to 1.5% from 2.3% the month before.
Fed’s Interest Rate Decision
On Wednesday, the Federal Reserve’s Federal Open Market Committee (FOMC) will issue its decision on interest rates. The Fed has raised rates for the last ten meetings in an effort to cool inflation, which has come down from 2022 highs but remains elevated. The central bank is widely expected to pause interest rate hikes at next week’s meeting and keep the fed funds rate steady at its 5-5.25% range, with the CME Group’s FedWatch Tool projecting a 74.8% probability of a rate hike pause.
Update on Retail Sales
Next week will also bring an update on U.S. retail sales from the Census Bureau on Thursday, giving us insight on consumer shopping trends and how they have been affected by inflation. U.S. retail sales likely rose 0.5% in May after a 0.4% rise in April following two months of declines as inflation-weary shoppers pulled back. Online shopping and food were among the categories that saw an increase in sales in April, while home furnishings and electronics dropped.