The rise in crude prices breaking its record high on almost a daily basis kept eyes wide open as inflation on a global level has become the number one priority for all the officials to act upon.

Prices the US customers had to pay for imported products rose 1.8% in April opposing median expectations of a 1.6% gain yet better than March's 2.9% revised reading from 2.8%. Inflationary pressures might be easing this month but still record high oil prices are not making it any easier. On the year, the imported price index beat all odds as it inched higher to 15.4 percent where forecasts were for a 15.0 percent gain and the prior reading was revised to 14.9% from 14.8%.

Obviously, the prices for imported petroleum jumped 4.4% while relatively, the price for non-petroleum products rose 1.1% for the second straight month marking the biggest gain since these prices were first reported in 1988! Non-fuel imports gained 1.0% unchanged from last month as it remains the largest gain since 2001.

This is where inflation pressures come from! Here we see the import price index rising on the backs of record high food and energy prices and unless something happens to perhaps stop the rally in global energy prices, then core inflation will continue its upward trend.

Yes, the dollar has been weak for quite some time and has only showed signs of strength recently but that still wasn't enough to help the world's largest nation try to pick up the pieces when it comes to growth. You'd think that it would boost exports since the goods have become relatively cheap for foreigners but surprisingly, exports took a sharp turn downhill in March. Alongside with the sluggish imports in March, the trade deficit had narrowed to $58.2 billion.

In a different report released at the same time, the Commerce Department reported that retail sales have dropped for the third time in the past five months as it came inline with expectations showing a decline of 0.2% in April compared to the gain of 0.2% witnessed in March where the retail sales excluding autos crawled higher to 0.5% from a revised reading to 0.4% from an originally reported 0.1% gain marking the largest gain since January.

Motor vehicle sales fell 2.8% while gasoline stations sales dropped 0.4% despite the incline in prices. Offsetting these declines came sales at electronics and appliance stores where they have gained 1.4%, while sales at general merchandise stores and clothing stores rose 0.5% and 0.7% respectively. Also, sales at food stores rose 0.5%.

Now consumer spending has been watched carefully as many try to find out what will be the consumer's next decision be? On one hand, small retailers are benefiting from the fact that they are attracting more customers from bigger, more expensive retailers and as a result are expecting higher returns in the near future. However, on the other hand, the other end of the argument shows that spending could slow further more than it has already slowed as food and energy prices skyrocket dragging consumer confidence down to the ground!!

Consumers now have three options when the government gives back the $110 billion in tax returns. The question is which way will they go? First, they could just use the money to spend more and purchase more and therefore boost growth. Second, many might actually use it as a resource to pay off their debts; and third, they might not be on debt and might not want to buy more products but rather save!

Markets mostly shook on the retail data as the dollar index gained and stock futures pared earlier losses! The dollar was able to gain 0.7% against the Japanese yen and advance against the Euro as the 15 nation currency went the other way falling 0.7% against the greenback. Futures such as the Dow Jones Industrial Average was able to add 8 points. As an aftermath to a stronger federal currency, alternative investments such as gold have plunged!

In Georgia, Fed Chairman Mr. Ben Bernanke gave a speech today in which the main topic on hand being that they will stand ready to increase the size of the auctions if further warranted by financial developments. According to him financial markets are still unsettled as they are far from normal yet showing slight improvement from the past!

Mr. Bernanke didn't say much about the interest rate and economic outlook yet he addressed other issues such as expanding the Term Auction Facility to include AAA rated asset backed securities and defending the central bank's decision to bail Bear Stearns. His defense was that if Bear Stearns were to announce bankruptcy, then their secured creditors and counterparties would sustain large losses as they would have liquidated their collateral in an already illiquid market and therefore they had to arrange $30 billion to help finance Bear Stearns.

Finally, the Commerce department released its business inventories giving hope that the recession might not be as severe as is expected as it showed the smallest gain in a year when it was reported at 0.1% opposing both the previous and expected readings of 0.6% and 0.5% respectively.

Low inventories is good for firms at a time where demand weakens otherwise they would have to either produce more or import more. Now, in addition with piled up stockpiles, manufacturers could have to let go of employees as they will not need more production at a time where the warehouses are already full.

Is this good?

'Houston we have a problem!' High inventories accounted for a large portion of the GDP already released and now since we see that inventories are light AND previous estimates for consumption, exports and investment were less then they actually are