Inflation Update



The Bureau of Labor Statistics has released the Consumer Price Index data for May, and the CPI is up about half a percent (actually, 0.47%) since April.

The annual inflation rate (year over year increase since May 2010) is now 3.6%. Most of this increase has come in the last six months, because the CPI was almost flat from May to November 2010. The inflation rate for the past six months (CPI percent increase at an annual rate since November) is 6.5%.

It wasn’t that long ago that the financial press was concerned about deflation, but as long as the Fed continues its low interest rate policy, inflation is the real threat. Two years ago I thought we’d see “Inflation Ahead” as a result of the Fed’s policies, and here it is.

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