Inflation Back, But Slowly

The U.S. enjoyed an unusual period of remarkably low inflation in 2003, but it's looking more than ever as though that good luck has expired. Following an unexpected 0.5% surge in March in two key inflation measures -- the producer price index (PPI) and the consumer price index (CPI) -- Wall Street had been hoping both numbers would moderate in April. Just the opposite happened with the PPI, a gauge of inflation at the wholesale level, which posted a hefty 0.7% rise in the overall, or headline, figure in April, the government said on May 13. While the numbers leave little doubt that a period of higher prices has begun, the Fed can likely stay its hand until after the election, and that is what will likely happen.

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