US economic activity continues to expand, prices rise modestly: Fed's Beige Book

Economic activity continued to expand in the US from early April to mid-May, while prices increased at a modest pace during that period, the Federal Reserve said in a report released Wednesday.

"Retail spending was flat to up slightly, reflecting lower discretionary spending and heightened price sensitivity among consumers," said the Fed's Beige Book, which gathers information on current economic conditions from the central bank's 12 districts across the nation.

Travel and tourism industries strengthened across much of the nation, as they were boosted by higher leisure and business travel; however, hospitality outlook is mixed for this summer season, it said.

While high interest rates continued to constrain lending growth, housing demand rose modestly and single-family construction increased, but there are still reports of rising mortgage rates affecting sales activity, the report added.

"Overall outlooks grew somewhat more pessimistic amid reports of rising uncertainty and greater downside risks," said the report.

Most districts noted that American consumers pushed back against additional price increases, while retail sector is offering discounts to entice customers.

"Price growth is expected to continue at a modest pace in the near term," according to the Beige Book.