In early May, inflation dropped by a whopping 0.5%. They contracted 0.9%, much worse than analysts expected and a new record as economists had been anticipating a 0.7% contraction. Tuesday, the US Census Bureau released some of that new data. As a result, it masked the fact that total retail sales jumped an astounding $715.4 billion for the month.
This drop follows an estimated 0.1% decline in April. That number was revised down from a previous estimate of a 0.1% increase. These new readings are downright scary when it comes to the health of consumer spending, with retail trade sales plunging 0.9% from April. Even though we are down on a month-to-month basis, the year-over-year picture shows positive signs. Through May, retail sales are up 3.0% from the same time last year.
The retail sales news wasn’t the only economic indicator with a mixed report this week. After several months of sharp declines, the Import Price Index didn’t budge in May from the month before. At the same time, the Export Price Index fell −0.9%. So, as these figures came out, the USD Index was relatively calm, maintaining a course at or near 98.00. At the time of writing, it was down by 0.04%, sitting at 98.10.
The US Census Bureau provided additional context regarding the recent retail performance, stating, “Total sales for the March 2025 through May 2025 period were up 4.5% from the same period a year ago.”
While retail activity experienced a monthly decline, the annual growth reflects a broader trend. Consumers have outdone themselves over the past year, demonstrating once again their talent for outrunning shifting economic winds. Analysts should keep a close eye on these trends, as they show increasing consumer confidence and economic prosperity in general.
“Retail trade sales were down 0.9% from April 2025, and up 3.0% from last year.” – US Census Bureau