- The Consumer Price Index (CPI) rose 0.6% in May from the prior month and 5.0% on an annual basis
- The price of West Texas Intermediate crude oil surpassed $71 last week, its highest level since October 2018
- The National Retail Federation expects a 10.5% to 13.5% increase in retail sales in 2021
Top Three Market Headlines
Consumer Prices Climb Higher: In a closely-watched report, the Bureau of Labor Statistics said last week that the U.S. Consumer Price Index (CPI) rose 0.6% in May from April and 5.0% compared to May 2020, the largest annual increase since 2008. Core CPI, which strips out the effects of volatile food and energy prices, rose 0.7% in May from April and 3.8% over the prior year, the highest rate since 1992. Surging used car prices (up 7.3% in May) had a meaningful impact on the overall CPI measure for the second straight month, accounting for roughly one-third of the monthly CPI increase in May. Prices for furniture, airline fares, and apparel also rose notably from the previous month.
Oil Rallies to Highest Price Since 2018: After plunging more than 20% in 2020, oil prices have rallied to multi-year highs in 2021. The price of West Texas Intermediate crude, the U.S. market benchmark, surpassed $71.00 per barrel last week, up from $48.35 at the start of the year, representing a gain of almost 50%. This marked the highest price since October of 2018, as the reopening of economies drives demand for the commodity while production resumes at a slower pace. Looking ahead, OPEC predicted last week that oil consumption will grow by five million barrels a day through the second half of 2021.
Retail Sales Forecast Rises for 2021: Based on indications of expanding economic activity, the National Retail Federation (NRF) last week raised its annual retail sales forecast for 2021. The NRF now expects retail sales—which includes purchases made both online and in stores while excluding sales at restaurants, car dealers and gas stations—to rise between 10.5% and 13.5% in 2021, up from its prior forecast of 6.5%. The heightened growth expectation would mark the fastest rate in the U.S. since 1984. The NRF also increased its projection for full-year GDP growth to nearly 7%, compared with the 4.4%-to-5.0% rate it expected earlier this year.