CPI Registers Spring Spike

Energy, food drive big May bump in consumer spending as core inflation stays cool
By J. Kelman,  Newser User
Posted Jun 15, 2007 11:06 AM CDT
Orders are completed on the floor of the New York Stock Exchange, Friday, April 20, 2007. Wall Street bounded higher Friday after Google Inc. led a series of stronger earnings reports that propelled the...   (Associated Press)
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(Newser) – The consumer price index jumped 0.7% in May, riding high energy prices to its second-biggest spike in 16 years. But the volatile food and energy sectors appeared not to disrupt the rest of the economy, MarketWatch reports. The core CPI, which excludes food and gas prices, rose only 0.15%, just enough below 0.2% forecasts to calm inflationary fears.

Core inflation is nearing the Fed's comfort zone, up 2.2% this year. That means Ben Bernanke and Co. will likely hold interest rates steady at 5.25% when they meet later this month, the Wall Street Journal suggests. Investors greeted the news with a buying spree, sending the Dow up over 100 points in midmorning trading.