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Data: U.S. Bureau of Labor Statistics; Chart: Axios Visuals

The May reading of the Consumer Price Index, out Thursday, was a doozy. In short, overall prices jumped 0.6% during the month, and were up 5% over the last 12 months.

Why it matters: We're only three months into this go-round of rising prices, so the crucial question of whether inflation is temporary, as the Fed expects it to be, or more structural, as some fear, isn't yet answerable.

The big picture: "Some of the supply bottlenecks and distortions are very severe right now, and these things just take a while to play out," Yung-Yu Ma, chief investment strategist at BMO Wealth Management, tells Axios.

  • But the rising prices are broad-based, hitting nearly every category in May on a year-over-year basis, notes Ma. Healthcare is the only category that declined, by 1.9%.

Reality check: As market watchers hunt for clues there are enough data points to back whatever narrative you want.

Investors are giving the Fed the benefit of the doubt — so far.

  • The S&P 500 rose to an all-time high Thursday, closing the day up 0.47%.
  • The 10-year Treasury declined 5 basis points, closing at a three-month low of 1.45%.

What to monitor:

  • The price of shelter (effectively a measure of rent) is one to watch because as a category it's generally stickier, Ma says. And the last three months' gains in the shelter category together add up to 1% — which, annualized would amount to about 3%.
  • Wage growth over the next few months, and whether businesses pass through higher costs to consumers.
  • Fiscal policy. "I am watching ongoing fiscal negotiations more closely than near-term CPI prints — fiscal policy is more important for the medium-term inflation outlook than are current prices," wrote Eric Winograd, senior economist at AllianceBernstein, in a research note.

The bottom line: The latest CPI reading is unlikely to convince the Fed to pull forward any plans for reducing its market support.

  • "Changing the stance of monetary policy won’t address supply chain disruptions," Winograd wrote.

Go deeper... By the numbers: The price of gas, beer, booze and makeup

Go deeper

Sep 17, 2021 - Health

Retail sales increase despite low expectations from Delta

Data: FRED; Chart: Axios Visuals

Consumers defied expectations and shopped at an increasing rate amid a resurgence in COVID-19 cases.

Why it matters: Several measures of consumer confidence fell sharply in August, suggesting consumer spending could fall during the month. In fact, concerns about the Delta variant's impact on the economy had prominent Wall Street economists cutting their expectations for Q3 GDP growth.

1 hour ago - Technology

Scoop: Facebook exec warns of "more bad headlines"

Illustration: Annelise Capossela/Axios

In a post to staffers Saturday obtained by Axios, Facebook VP of global affairs Nick Clegg warned the company that worse coverage could be on the way: “We need to steel ourselves for more bad headlines in the coming days, I’m afraid.”

Catch up quick: Roughly two dozen news outlets had agreed to hold stories based on leaked materials from Facebook whistleblower Frances Haugen for Monday publication — but the embargo fell apart Friday night as participating newsrooms posted a batch of articles ahead of the weekend.

"Atmospheric river" to whiplash Northern California from drought to flood

A map depicting 24-hour preciptation forecast (inches) ending Monday at 5a.m. local time. Photo: NOAA

A series of powerful "atmospheric river" storms are set dump historic amounts of rainfall across parts of drought-stricken California and the Pacific Northwest from this weekend, forecasters warn.

Why it matters: A strong atmospheric river, packing large amounts of moisture, is predicted to whiplash Northern California from drought to flood.