The markets were looking for 0% change in CPI, but to everyone’s surprise, it came in at 0.2%. As the report states, it actually came in at 0.3% excluding food and energy, which is the highest increase since July of 2008, when the economy was still skyrocketing, and growth was in everyone’s eyes for the foreseeable future.  What is troubling is the inflationary increase, coupled with extremely sluggish GDP growth, and continued pressure from the jobs data.  Was QE2 a good idea?

 Consumer Price Index - May 2011

 The Consumer Price Index for All Urban Consumers (CPI-U) increased
 0.2 percent in May on a seasonally adjusted basis, the U.S. Bureau of
 Labor Statistics reported today. Over the last 12 months, the all
 items index increased 3.6 percent before seasonal adjustment.

 The index for all items less food and energy increased 0.3 percent in
 May, its largest increase since July 2008. The indexes for apparel,
 shelter, new vehicles, and recreation all contributed to the
 acceleration, rising more in May than in April. These increases more
 than offset declines in the indexes for airline fare, tobacco, and
 personal care.

 The food index rose in May as well. The food at home index repeated
 its April increase of 0.5 percent as four of the six major grocery
 store food group indexes increased, with the index for meats,
 poultry, fish, and eggs rising the most. In contrast, the energy
 index, which had been rising sharply, declined in May.  The gasoline
 index decreased for the first time since last June, although the
 index for household energy increased.

 The upward trend among the 12 month increases of major indexes
 continued in May. The 12 month change in the all items index, which
 was 1.1 percent as recently as November, reached 3.6 percent in May.
 The energy index has increased 21.5 percent over the last 12 months,
 the food index has risen 3.5 percent and the index for all items less
 food and energy has increased 1.5 percent. All of these figures have
 been rising in recent months.

 Table A. Percent changes in CPI for All Urban Consumers (CPI-U): U.S. city
 average

                                  Seasonally adjusted changes from
                                          preceding month
                                                                          Un-
                                                                       adjusted
                              Nov.  Dec.  Jan.  Feb.  Mar.  Apr.  May   12-mos.
                              2010  2010  2011  2011  2011  2011  2011   ended
                                                                       May 2011

 All items..................    .1    .4    .4    .5    .5    .4    .2      3.6
  Food......................    .2    .1    .5    .6    .8    .4    .4      3.5
   Food at home.............    .2    .2    .7    .8   1.1    .5    .5      4.4
   Food away from home (1)..    .1    .1    .2    .2    .3    .3    .2      2.2
  Energy....................    .1   4.0   2.1   3.4   3.5   2.2  -1.0     21.5
   Energy commodities.......    .7   6.4   4.0   4.8   5.5   3.1  -1.9     36.2
    Gasoline (all types)....    .7   6.7   3.5   4.7   5.6   3.3  -2.0     36.9
    Fuel oil (1)............   4.2   4.9   6.8   5.8   6.2   3.2   -.8     36.0
   Energy services..........   -.8    .6   -.6   1.1    .2    .6    .6      1.1
    Electricity.............    .6    .3   -.5    .4    .7    .2    .8      1.8
    Utility (piped) gas
       service..............  -5.3   1.7  -1.2   3.4  -1.4   1.9   -.3     -1.2
  All items less food and
     energy.................    .1    .1    .2    .2    .1    .2    .3      1.5
   Commodities less food and
      energy commodities....    .0   -.1    .2    .2    .1    .4    .5      1.2
    New vehicles............   -.2   -.1   -.1   1.0    .7    .7   1.1      3.4
    Used cars and trucks....    .1   -.1   -.3    .1    .8   1.2   1.1      4.1
    Apparel.................    .1    .1   1.0   -.9   -.5    .2   1.2      1.0
    Medical care commodities
       (1)..................    .2    .1    .5    .7    .5    .5    .0      3.0
   Services less energy
      services..............    .2    .1    .1    .2    .2    .1    .2      1.6
    Shelter.................    .1    .1    .1    .1    .1    .1    .2      1.1
    Transportation services     .4    .2    .6    .5    .5    .2    .1      3.3
    Medical care services...    .2    .3   -.1    .4    .1    .3    .3      3.0

   1 Not seasonally adjusted.

 Consumer Price Index Data for May 2011

 Food

 The food index rose 0.4 percent in May, the same increase as in
 April. The food at home index increased 0.5 percent and has risen 3.7
 percent since December. Among major grocery store food groups, the
 index for meats, poultry, fish, and eggs rose 1.5 percent and the
 cereals and bakery products index increased 1.0 percent. The dairy
 and related products index and the index for other food at home
 posted smaller increases, while the index for nonalcoholic beverages
 was unchanged. The only group to decline was the fruits and
 vegetables index, which declined 1.3 percent as a sharp decline in
 the index for tomatoes caused the fresh vegetables index to fall for
 the second straight month after sharp increases early in the year.
 The food at home index has risen 4.4 percent over the last 12 months
 with all major grocery store food groups posting increases. The index
 for food away from home rose 0.2 percent in May after rising 0.3
 percent in each of the previous two months.

 Energy

 The energy index declined 1.0 percent in May ending a series of ten
 consecutive advances. After a series of several sharp increases, the
 gasoline index declined 2.0 percent in May. (Before seasonal
 adjustment, gasoline prices rose 3.6 percent in May.) Despite the May
 decline, the gasoline index has increased 23.7 percent over the past
 six months. The index for household energy increased in May, rising
 0.5 percent after a 0.7 percent increase in April. The index for
 electricity rose 0.8 percent, more than offsetting a 0.8 percent
 decline in the fuel oil index and a 0.3 percent decrease in the index
 for natural gas. The household energy index has risen 2.9 percent
 over the last 12 months, with the fuel oil index up 36.0 percent and
 the electricity index up 1.8 percent but the index for natural gas
 down 1.2 percent.

 All items less food and energy

 The index for all items less food and energy rose 0.3 percent in May
 after increasing 0.1 percent in March and 0.2 percent in April. The
 shelter index rose 0.2 percent in May after increasing 0.1 percent in
 each of the seven previous months. Both rent and owners' equivalent
 rent rose 0.1 percent; the acceleration in shelter was due to the
 index for lodging away from home, which rose 2.9 percent in May after
 being unchanged in April. The apparel index increased in May, rising
 1.2 percent after a 0.2 percent increase in April. The index for new
 vehicles rose 1.1 percent in May after increasing 0.7 percent in
 April; the index for used cars and trucks also rose 1.1 percent. The
 index for recreation, which was unchanged in April, rose 0.3 percent
 in May. The medical care index rose 0.2 percent, with the index for
 medical care commodities unchanged and the index for medical care
 services up 0.3 percent. The index for household furnishings and
 operations advanced 0.2 percent, the same increase as in April. In
 contrast to these increases, the index for airline fares fell 1.3
 percent in May, and the indexes for tobacco and for personal care
 both declined 0.2 percent.

 The index for all items less food and energy increased 1.5 percent
 over the last 12 months, with virtually all of its major component
 indexes rising at a faster rate over the past six months than they
 did from May to November of 2010.

 Not seasonally adjusted CPI measures

 The Consumer Price Index for All Urban Consumers (CPI-U) increased
 3.6 percent over the last 12 months to an index level of 225.964
 (1982-84=100). For the month, the index increased 0.5 percent prior
 to seasonal adjustment.

 The Consumer Price Index for Urban Wage Earners and Clerical Workers
 (CPI-W) increased 4.1 percent over the last 12 months to an index
 level of 222.954 (1982-84=100). For the month, the index rose 0.5
 percent prior to seasonal adjustment.

 The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
 increased 3.3 percent over the last 12 months. For the month, the
 index increased 0.4 percent on a not seasonally adjusted basis.
 Please note that the indexes for the post-2009 period are subject to
 revision.

 The Consumer Price Index for June 2011 is scheduled to be released on
 Friday, July 15, 2011, at 8:30 a.m. (EDT).