EM LATAM CREDIT: ARGENTINA: Milei Hosts Mercosur Summit, Lula Visits Kirchner

Eurozone core inflation prices fell 0.12% M/M in May according to the ECB’s seasonally adjusted data, after rising 0.45% in April. Unsurprisingly, services drove the pullback, with prices falling 0.17% M/M after a 0.70% increase in April. Core goods inflation was 0.06% M/M (vs -0.02% prior).

• As implied by the country-level NSA data over the past week, the services softness was largely a function of unwinding Easter effects. However, the extent of the SA and NSA deceleration from April’s levels could suggest more broad-based disinflation in non-travel-related categories. We’ll have to wait for the final release on June 18 to see whether that was the case.
• Attempting to correct for Easter effects, average monthly seasonally adjusted services inflation between March-May was 0.27% in 2025. That’s below the 0.41% seen in 2024 and 0.37% in 2023, providing further evidence that underlying disinflation is progressing.
• 3m/3m core inflation momentum eased to 2.70%, after 2.87% in April and 2.37% in March. Services momentum fell to 3.95% from 4.10% prior.
• Referencing the NSA data, JP Morgan write: “That core inflation in May (2.3%oya) undershot the March level (2.4%oya) may be linked to an additional distortion. The late Easter also comes with a late Pentecost this year, which also impacts short holidays in some countries (skewed towards June rather than May). This effect is smaller than the Easter effect but can be significant”.

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The latest Redbook Retail Sales Index showed 4.9% Y/Y growth in the last week of May (to May 31), a slowdown from 6.1% the prior week but still keeping total monthly sales at 5.5% Y/Y (vs retailers' 5.4% targeted gain). This is the first Redbook report in a while to refer to tariffs, and it earns a mention on the inflationary side: "Due to tariffs, some retailers have selectively increased prices on their products. A few retailers have lowered their profit outlooks and withdrawn their full-year guidance." 

• Redbook also notes looking forward that "seasonal demand is expected to drive business through June", with a preliminary growth target of 5.2%, though "it is likely to moderate in July, which is a transitional month leading up to the fall restocking and back-to-school periods".
• Separately, the Chicago Fed's CARTS estimate of retail sales ex-autos growth in May is 0.4% M/M SA (vs 0.10% in the "official" series for April).
• While both of these series are in nominal terms (which is no different from the official Census Bureau series), there is no evidence in the data to suggest a slowdown in national retail sales in May. Indeed the CARTS report points to a 0.4% inflation-adjusted rise in retail sales ex-autos.
• There aren't yet estimates for the May Census Bureau release which is out on June 17.