German Consumer Price Index (MAY F) (06:00 GMT; 02:00 ET)
                  (MoM)  (YoY)
Consensus:  0.2%  1.9%
Previous:      0.4%  2.0%

Outlook: Germanyâ�,��"�s main inflation index, calculated as the average price change of a â�,��"basket of goodsâ�,� from transportation to medical care, is expected to rise another 0.2% from April.  On the more important, annual measurement, estimates suggest a 1.9% pace, which would match initial expectations.  Higher than expected results in this common price gauge could put more pressure on the ECB to meet inflation head on given Germany is the largest economy in the zone and its data is usually a good leading indicator for the broader reads for the whole area.  There is little consensus in the market that the official May read will be far off of the advance read of 1.9%.  Inflation last month eased from Aprilâ�,��"�s 2.0% figure, the top of the ECBâ�,��"�s 1% to 2% tolerance band, as cheaper foreign crude prices and an expensive currency discouraged import activity.  The zoneâ�,��"�s central bank will monitor the German data to determine if the previous rate hikes, starting back in December, have significantly reined in price growth or if more tightening will be required. At their June 8th meeting, where officials decided to increase the refinancing rate another 25 basis points to 2.75%, ECB President Jean-Claude Trichet issued more neutral commentary suggesting additional rate hikes will be contingent on economic data. 

Previous: Inflation in Germany accelerated for the first time in seven months in April by 0.4% for the month and putting the annual read up to 2.0%.  Playing a key role in the gaugeâ�,��"�s strong advance, and the subsequent ECBâ�,��"�s rate-hike that followed from it this month, was the 44% surge in oil prices on the year.  A 10% plus rise in crude and an equally crippling 0.9% advance in heating oil hit consumers in the wallet with higher heating bills and a fear-driven run up in the price of gasoline.  German figures have trailed behind the Euro-zoneâ�,��"�s aggregate inflation read since November; however because of its size, movements in the member nationâ�,��"�s CPI gauge will mirror those in the larger aggregate read.

UK Consumer Price Index (MAY) (06:00 GMT; 02:00 ET)
                  (MoM)  (YoY)
Consensus:  0.4%  2.1%
Previous:     0.6%  2.0%

Outlook: Price growth in the United Kingdom is expected to reach a six-month high 2.1% in May, above the Bank of Englandâ�,��"�s 2.0% target inflation rate. This monthâ�,��"�s projected increase in the CPI becomes more likely as the PPI output read, measuring the prices that producers receiving for their goods, increased 3.0%, beating the more reserved 2.8% expected rise.  The rise in prices at factory gates represented the fifth consecutive increase and was itself the fastest pace in eight.  Companies have been raising prices to recoup a portion of the costs incurred by soaring input costs, which were 13.8% higher over in May from a year before.  Further distillation of the producer prices indicator reveals petroleum products were a primary contributor to the overall increase in prices with a record high 1.7% increase.  However, core producer prices, striping volatile tobacco, food, drink and petroleum products, rose for the seventh consecutive month.  These conditions should be reflected in the consumer read as retailers are generally the last safety net before the increase hits shoppers, and storeowners have recently been more willing to pass with consumer spending and the overall economy rebounding significantly since fourth quarter lulls.  Evidence of this comes from the British Retail Consortium indicator reported last week reporting retailers increased prices for consumers last month, and indicated their expectation that prices will continue to rise. 

Previous:  Inflation in April accelerated to a 2.0% annual rate, an increase over the previous monthâ�,��"�s 1.8% figure, and bringing the important read to the upper bound of the central bankâ�,��"�s target range. Given that figure stood within the BoEâ�,��"�s acceptable range, the Monetary Policy Committee decided to forgo a change in interest rates for the 10th consecutive meeting last week, but it did leave many with the taste of inflation in their mouths. The growth in the CPI last month to 2.0% was partly attributable to record crude prices that took a toll on industries across the board and further led to a dissemination of higher costs into consumer goods. Utility prices were affected particularly harshly, increasing 7.7% year over year.

US Producer Price Index (MAY) (12:30 GMT; 08:30 ET)
                  (MoM)  (YoY)
Consensus:  0.5%  4.3%
Previous:      0.9%  4.0%

Outlook: The Producer Price Index, a measurer of the change in prices from the perspective of the US seller, is expected to increase 0.5% from April.  Core PPI is forecasted to accelerate to 0.2%, reflecting perhaps that second round effects from high-energy costs are finally settling into more conventional products, and now inflation is no longer confined to just the usual volatile energy products.  Thus far, competition has held companies back from raising prices, but any sign that companies are passing these costs onto customers may give the Fed scope to respond.  Fuel and commodity prices held over from April are expected to prompt firms to try out higher prices.  The good news for the economy is that oil is down over 4% on the month, despite its volatility.  The price of oil dipped below $69 following the death of Al-Zarqawi and a pullback in fuel on fears that global growth would falter and demand for the commodity would ease.  Global relations and greater fuel efficiency will be key for the future of the PPI and thus the actions of the Fed.

Previous: Aprilâ�,��"�s surge in prices received by factories, farmers and other producers for their goods was the largest increase in seven months.  This spike was largely due to the biggest jump in gasoline receipts in over a year.  Another generous contribution came from imports, which were more expensive with a weaker dollar and soaring prices and demand for foreign crude oil and metals.  The more consistent read of core PPI, which omits food and energy, similarly rose 0.1% for the second straight month.  A jump in the PPI while the core PPIâ�,��"�s growth remains constant is a sheer reflection of the higher costs in energy.  Along with construction indicators dropping more than expected, the small core PPI increase led treasuries to gain, in anticipation that the Fed might have scope to forecast a slower pace of consumer inflation and therefore less need to keep the fed fund rate on a steady quarter point diet.

US Advanced Retail Sales (MAY) (12:30 GMT; 08:30 ET)
Consensus: 0.0%
Previous:   0.5%

Outlook: Economists are projecting that sales at U.S. retailers last month were unchanged, as US consumers restrained spending due in part to higher energy prices for the period. A hefty decline in US auto sales is also expected to take a bite out of the retail sales numbers, as domestic sales fell by 9% last month. US retail sales excluding autos, however, are expected to experience some level of growth, with estimates ranging between 0% and 0.8%. These expectations of growth come despite the evidence of pessimism among consumers that could lead to constrained spending, as the University of Michigan consumer confidence survey for May fell by 8 points to 79.1. In addition, even if the headline retail sales number does increase, some portion of that growth will likely be attributable to higher gasoline prices. If the Federal Reserve increases interest rates this month as expected, demand could continue to suffer as higher lending rates eat away at purchases of big-ticketed items and credit card purchases.

Previous: Aprilâ�,��"�s retail sales numbers were lower than forecasted at 0.5%, after growth of 0.6% the month before. This number, while lower than expected, at least continued the trend of slow growth in retail sales, which had been started out negative in February. The bad news is that while sales did increase, a lot of that increase came at the pump, with gas prices increasing to record highs. Excluding purchases at service stations, retail sales only increased by 0.1%. Economists were unsurprised by these numbers, as the Federal Reserve continued to raise interest rates and announced its predictions of only moderate economic growth this year.

Richard Lee is a Currency Strategist at FXCM.