US retail sales drop

Some shoppers on Fifth Avenue continue to spend their cash

The US boom appears to be slowing, as retail sales fall 0.3% in May from April.

This was the second month in a row in which retail sales have fallen.

A big drop in sales at hardware, building and garden supply stores led the decline, as the Federal Reserve's interest rates rises encouraged consumers to stay at home for the second month in a row.

Analysts are divided as to whether the data will deter the Federal Reserve from making further interest rate rises.

Many analysts had expected retail sales to actually go up by 0.1% in May.

In April, retail sales fell 0.6%, weaker than the government had originally estimated. This has been attributed to bad weather and higher interest rates.

Rates on hold?

The Federal Reserve has raised interest rates six times since last June, and will meet again at the end of the month in a two-day session.

Moody's Investors Service chief economist John Lonski said: "This latest news is enough to practically rule out the possibility of a Federal Reserve rate hike in June. It appears as though the US economy is slowing, inflation risks are receding, and there is a much lower sense of urgency for the Federal Reserve to do something to contain inflationary pressures."

Key to the Federal Reserve decision will be the consumer price data, which will be released on Wednesday.

Other measures of inflation, for example the prices paid by factories and businesses, were unchanged in May from the month before - weaker than expected.