US retail sales and import prices dropped sharply last month, fanning fears of deflation and offering more evidence of the continued weakness of the US economy.
Stock prices fell and Treasury bond yields sank to a 40-year low, the dollar weakened slightly and betting on future Federal Reserve interest-rate cuts intensified in reaction to the data.
The fall in sales was accompanied by consumer confidence data suggesting that 73 per cent of Americans consider the economy's condition to be "negative" and a poll in which most respondents did not express confidence in President Bush's handling of the economy.
The figures appeared to show that the rebound many had hoped for after the Iraq war has not yet materialised.
The Commerce Department said sales dipped 0.1 per cent in April and fell 0.9 per cent excluding car sales.
The figures continued an erratic pattern - sales dropped 1.4 per cent in February, but jumped 2.3 per cent in March.
The Labor Department reported a 2.7 per cent plunge in import prices - the biggest in a decade.
The ABC Consumer Comfort index, a weekly measure of consumer confidence also out yesterday, fell for the third consecutive week. - (Financial Times Service)
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