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Reports Show Rise in US Inflation, Retail Sales

May 12, 2017

U.S. consumers bought more cars and hardware, and stepped up online purchases in April, after two months of sluggish sales.

Friday's report from the Commerce Department says retail sales rose four-tenths of a percentage point in April, and sales were a bit better than first reported the previous month.

The data show even stronger growth for online retailers, while sales at traditional "bricks and mortar" stores sagged half a percentage point.

Investors and economists watch retail sales closely because consumer demand drives more than two-thirds of economic activity in the United States, which is the world's largest economy.

A separate study by the Labor Department shows U.S. inflation rose 2.2 percent in the year ending in April, with a gain of two-tenths of a percent for the month. Some analysts say that makes it likely that the U.S. central bank will raise interest rates slightly at their next scheduled meeting in June.

The Federal Reserve is supposed to promote stable prices and full employment. When inflation threatens to rise a modest level, they may raise interest rates to cool economic activity and keep prices from rising so fast they disrupt economic growth.

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