With so many Americans vested in the stock market, statistics watching has become a new national pastime and rarely has a statistic been watched more closely than the consumer-price report released Wednesday.
The result was a reassuring letdown. The overall Consumer Price Index, the most common measure of inflation, did nothing at all in May. And that part of the CPI that did rise, the so-called "core prices," did so at a bare 0.1 percent.That meant the abrupt 0.7 percent CPI increase for April was most likely a one-time spike and not, as so many feared, a harbinger of returning inflation.
The Federal Reserve Board had hinted, in a nudge-nudge, wink-wink sort of way, that it would raise interest rates when it meets June 29 if there were a serious increase in inflation two months running. An increase in central bank rates makes anything to do with borrowed money more expensive, thus slowing the economy.
Wall Street, Main Street and official Washington were ecstatic over Wednesday's figures, and only bond investors who had counted on a resumption of inflation were left disgruntled. Inflation for the year is running at 2.6 percent, not as good as last year's 1.6 percent, when for a few heady months economists were talking about the perils of deflation, but still very good.
Ironically, a real threat to U.S. price stability is good news overseas: If the economies of Japan and the other Asian nations and Latin America really are reviving, their prosperity would cause prices here to rise. Statistics watchers should stay tuned.