S&P Global: U.S. and Canada economic data highlights: Week of May 12, 2025

We anticipate the Consumer Price Index (CPI) will increase by 2.3% year over year for April, while core inflation should remain stable at 2.8%. Household spending remains strong, but we expect retail sales to remain flat for April, following a 1.5% rise in March.

The upcoming April CPI readings for inflation and retail sales will reflect tariff distortions. Consumer sentiment has been declining, given inflation and tariffs, even though the data shows consumers are still spending.

The Federal Reserve kept its policy rate steady at last week's Federal Open Market Committee (FOMC) meeting, remaining in wait-and-see mode. Given rising inflationary pressure, we anticipate the Fed will keep the federal funds rate at 4.25%-4.50% for most of 2025.

S&P Global Ratings today published this weekly preview of the most important upcoming economic data for the U.S. and Canada.

What's Happening This Week: April Inflation And Retail Sales CPI Will Reflect Tariff Distortions

U.S.
Tuesday: CPI (April); Thursday: Retail sales (April), industrial production (April); Friday: Building permits (April), housing starts (April)

We expect the CPI will rise by 0.2% month over month for April, following a decline of 0.1% in March. This change translates to a year-over-year inflation rate of 2.3%, down from 2.4% in March. The April forecast would be the lowest CPI reading since March 2021.

While gasoline prices have increased for a few months, they have fallen by nearly 12% year over year, underscoring weak demand.

The core CPI, which excludes volatile food and energy prices, is expected to rise by 0.2% month over month, keeping the year-over-year rate steady at 2.8%. This suggests price pressure remains elevated.

We anticipate nominal retail sales will remain flat for April, following a 1.5% rise in March and amid a 2.8% decline in motor vehicle sales. Retail sales excluding motor vehicles are set to grow by 0.2% for April after a 0.6% increase in March.

Household spending continues to show solid gains, supported by resilient labor market conditions.

We expect industrial production to expand by 0.4% for April, rebounding from a 0.3% decline in March. However, manufacturing output likely contracted in April due to trade uncertainties.

The Institute for Supply Management (ISM) manufacturing production subindex has fallen to its lowest in five years. Excluding the pandemic-related shock of spring 2020, this reading is the weakest since the 2009 global financial crisis.

We anticipate building permits will decline by 1.8% for April to an annualized rate of 1.44 million units, after a slight increase of 0.6% in March.

Conversely, housing starts are slated to rise by 5% in April, reaching an annualized rate of 1.39 million units, following an 11.4% decrease in March.

Why it matters

The series of domestic activity data to be released this week will be the first since the announcement of U.S. tariff hikes.

Inflation and retail sales are key indicators the central bank and financial markets will closely monitor to assess household spending and inflation trends.

Inflation has been moderating for three consecutive months, primarily on weaker global demand, which has lowered energy prices, alongside a persistent slowdown in housing prices.

Looking ahead

Disinflationary pressure will likely persist over the next few months, primarily due to the declines in energy and housing prices.

However, increasing tariffs may disrupt the global supply chain, potentially exacerbating inflationary pressure. We anticipate headline inflation will rise to 3.4% by the end of the year, while core CPI will accelerate to 4.1%--both significantly above the Fed's inflation target.

We expect consumer spending will deteriorate further in the coming months as tariff-led consumer price inflation weakens households' real disposable income--leading to average sequential growth in real consumer spending of 1.3% for 2025.

Source: S&P Global

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