US retail sales and consumer price record a significant fall in March  

The US economy witnessed a significant fall in its retail sales for the second consecutive month in March, 2017, while the consumer prices plunged for the first time in a period of 13 months in alignment with the predictions about the US economy losing momentum in the first quarter of FY18. 

The retail sales reduced by 0.2 per cent against an expected fall of 0.1 per cent in March 2017. The fall was preceded by a record decline of 0.3 per cent in February 2017, marking the highest decline in nearly a year's time. Although on a year-on-year basis, the retail sales in March 2017 increased by 5.2 percent compared to March 2016. Whereas a fraction of retail sales except for automobiles, gasoline, building materials and food services also rebounded by 0.5 per cent in March 2017.    

The US economy also reported a decline in its consumer price index by 0.3 per cent in March 2017, posting the first decline in a year, as a dropping cost of gasoline and mobile phone services offset the rise in rents and food prices. 

The core CPI, which excludes food and energy costs, dropped by 0.1 per cent, marking the largest decrease since January 2010, although the economy posted a rise in CPI by 0.2 per cent in February 2017. However, the year-on-year increase also slumped to 2 per cent. While the slowdown in the consumption is partly attributed to the late disbursement of the income tax refunds by the government.  

The current rate of inflation in the US economy prevails at 1.8 per cent, while the fed targets a 2 per cent inflation in the economy.     

However, with the prevailing full employment situation in the economy, the drop in retail sales and consumer prices is also likely to bounce back to the usual level soon, thus, not interrupting the federal reserve's expected course of action of raising interest rates in June 2017.     

Consumer spending likely braked sharply in the first quarter after growing at a brisk 3.5 per cent annualised rate in the final three months of 2016. The apparent slowdown in consumption is partly blamed on the late disbursement of income tax refunds by the government as it sought to combat fraud.