Early warning for Stagflation

Stock index futures were rocked by today's CPI data, which showed core prices rose more than expected . The Labor Department reported April CPI +0.6% and Core CPI +0.3%. On a seasonally-adjusted basis, the CPI is up 5.1% in 2006, compared to a rise of 3.4% in 2005. Core CPI is up 3.0% this year, versus 2.2% in 2005.

The reckless Bushian fiscal policy with high deficits and accelerating commodity prices may toll the knell for economic expansion and set the stage for the avant of Stagflation (flat or declining growth with rising prices).