This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Inflation Edges Up in May

NEW YORK ( TheStreet) -- Inflation in May rose by 0.2%, according to the Department of Labor's latest read on consumer prices.

The slight hike came in worse than the forecasted 0.1% rise. Increases in clothing, housing and car costs, as well as food and household energy prices, drove up overall inflation. While airline, tobacco and personal care costs declined, they did not offset the usual inflationary pressures.

The latest up-tick in the consumer price index continues a narrative of inflation from April and May, which saw increases of 0.4% and 0.5%, respectively.

Core inflation, which strips out volatility from food and energy prices, ticked up by 0.3%, also a notch higher than the expected. Economists were predicting a 0.1% rise. The government watches core inflation carefully because it is considered the closest gauge of inflationary pressures. Core inflation rose 0.2% in April and 0.1% in March.

"The numbers reiterate the concern of stagflation," said Jay Suskind, senior vice president at Duncan Williams. "We can talk about core inflation, but let's face it, food and energy costs are the main expenses for the average person every day and those prices are through the roof," he added.

Williams predicts that the markets won't applaud this latest round up of consumer prices. "Yesterday's market rally will be more of a 'dead-cap bounce'," he said.

The Dow's positive gains yesterday were seen as a relief after a two-week losing streak. Today's markets have already opened lower, suggesting that fears of a slow patch in the economic recovery have returned.

"The consumer price index on a year-to-year basis is the highest in a couple of years," said Suskin. "Now the concern is that we're not at the end of higher prices, we're at the beginning." On a yearly basis, the consumer price index for May rose 3.6%.

Gas prices in May decreased for the first time since June 2010. However, consumers still felt a hit as household energy prices for May still saw a 0.5% uptick. Electricity prices rose 0.8%, offsetting declines in oil and natural gas.

The disappointing results in consumer inflation hit this morning's headlines along with a report showing poor performance in New York's manufacturing sector. The worse-than-expected numbers for industrial production didn't take any of the sting away. By far, signs are pointing to a troublesome economy.

-- Written by Chao Deng in New York.



>To contact the writer of this article, click here: Chao Deng.

>To follow the writer on Twitter, go to Chao Deng.

>To submit a news tip, send an email to: tips@thestreet.com.

Copyright 2011 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs