Key facts
- US retail sales fell 0.6% in July.
- US consumer sentiment dropped to 51.0 in early August.
- US producer prices were unchanged in July.
- Argentina's monthly inflation rose to 2.1% in July.
- Argentina's 12-month inflation reached 33.8%.
- China's new yuan loans contracted by 340 billion yuan in July.
- The Bank of Japan is considering a September interest rate hike.
- US business inventories were unchanged in June.
- Energy prices are projected to fall 5.7% month-over-month in June 2026.
US retail sales experienced an unexpected decline of 0.6% in July, marking the largest drop in over a year and falling short of forecasts. This downturn raises concerns about the resilience of consumer spending in the face of ongoing inflation and elevated gas prices. Concurrently, U.S. consumer sentiment saw a sharp decrease in early August, with the University of Michigan's Consumer Sentiment Index falling to 51.0 from 55.2 in July. This decline is attributed to growing anxieties regarding the rising cost of living and the ongoing conflict in the Middle East.
Recent U.S. inflation data has offered some signs of moderation, with producer prices remaining unchanged in July, following minimal increases in consumer prices. This benign inflation data has led traders to further reduce expectations of a Federal Reserve rate hike in September. Chicago Fed President Austan Goolsbee indicated that better inflation data might mean a pause in rate hikes, although rising crude oil prices and geopolitical tensions continue to temper market optimism.
Globally, economic indicators present a mixed picture. Argentina's monthly inflation rate climbed to 2.1% in July, up from 1.9% in June, with the 12-month inflation figure reaching 33.8%. In China, new yuan bank loans contracted by 340 billion yuan in July, missing forecasts and representing the second contraction this year, attributed to weak household credit demand and seasonal factors. Outstanding loans are growing at a record low. The Bank of Japan is considering raising interest rates as early as September and potentially accelerating future hikes, driven by concerns over inflation fueled by global conflicts, AI demand, and a weakening yen.
Looking ahead, U.S. business inventories remained unchanged in June, a stable reading after a 0.4% rise in May. This equilibrium was influenced by an increase in wholesale stocks counterbalanced by a decline at the retail level, suggesting robust domestic demand. Energy prices are projected to fall by 5.7% month-over-month in June 2026, according to U.S. Consumer Price Index data, potentially easing overall inflation pressures.