Jim Cramer calls elevated CPI 'artificial inflation' — what that means for the stock market

Livestream Menu Make Itselect USAINTLLivestream Search quotes, news & videos Livestream Watchlist SIGN INCreate free account Markets Business Investing Tech Politics Video Watchlist Investing Club PROLivestream Menu

Jim Cramer calls elevated CPI 'artificial inflation' — what that means for the stock market Published Wed, Jun 10 20261:08 PM EDTUpdated 49 Min Ago Zev Fima@zevfima. The stock market was under pressure again on Wednesday due to an intensification of the war with Iran. The subsequent rise in oil prices on the same day that the consumer price index registered its highest reading in three years certainly didn't help. The war is a wildcard. Nothing we can do about that. But the CPI, a broad measure of inflation released monthly, was not nearly as bad as the Wall Street narrative would have you believe. Headline CPI in May rose 4.2% year over year. While matching estimates, it was the biggest increase since the 4.9% number in April 2023. OK, that's clearly not great. The core rate, which excludes volatile energy and food prices, advanced 2.9%. It also matched estimates but was only the highest reading since 3.1% in February, before the war sent oil prices through the roof. Neither is welcome news for consumers already feeling the burden of higher costs. But from a markets perspective, it was a welcome print because the core rate tells us that underlying inflation is not that hot. On "Squawk on the Street," about a half hour after the CPI hit the tape at 8:30 a.m. ET, Jim Cramer said he liked the numbers. "The things that were outliers are all related in one way or another to Iran. ... But when I look at it, I say, 'Alright when you get this war over in two or three days ... then I think you'll look pretty good.'" President Donald Trump expressed similar sentiments about the CPI reading: "I love it, the numbers were great. ... Because as soon as this war is over, you know I can say it now ... you know we've been taking out millions of barrels of oil." Later during Wednesday's Morning Meeting for Club members, Jim said, "We have artificial inflation. It's not real. … Remember, gasoline reverberates throughout the system, particularly diesel." He also argued that the positive benefits of the Supreme Court striking down much of Trump's tariffs has not been seen. "They were kind of baked into the system," he added, stressing that now they are not that bad. While the market and Federal Reserve policymakers like to look at core inflation, energy cannot be completely disregarded because consumer spending behaviors can be influenced by the bite of higher gas prices. When transportation services costs increase, those costs get passed through to the consumer. Within the CPI, airfares in May showed an increase of 26.7% year over year. While the impact is likely more extreme in this example, given that fuel represents a major input cost for airlines and the pricing dynamics in the industry allow for rapid changes in ticket costs, it should be understood that similar dynamics are happening everywhere. Thursday's produce price index will be scrutinized for what it tells us about wholesale inflation. The biggest question for investors is how new Fed Chairman Kevin Warsh and his central bank colleagues see the economic landscape through the lens of their dual mandate to foster stable prices and maximum employment. Next week's meeting to determine the path for interest rates will be Warsh's first as chair; he served as a Fed governor from 2006 until 2011. The CME FedWatch tool , which tracks futures market expectations for Fed rate moves, puts near certainty on rates holding steady this time around. Trump has made no secret that he wants rates lower. However, the conversation since he nominated Warsh on Jan. 30 to lead the Fed has shifted from predicting whether a rate cut is possible to how many rate hikes might be needed. That answer to that depends on many factors, including where the primary sources of inflation lie, and how quickly refined usable oil can be brought to market once the Strait of Hormuz reopens. Looking through the components of the CPI, we are left thinking that a lot of the upside areas of inflation can reverse once the Strait reopens. The market seems to share that view as the FedWatch Tool didn't budge much on the release, still putting about 40% odds on the likelihood of at least one hike by year end. The yield on 10-year Treasury was also largely unchanged following the print. As a result, we think that the flood of equity coming to market from the initial public offering of Elon Musk 's SpaceX, which is set to begin trading Friday, and the upcoming IPOs of Anthropic and OpenAI — not to mention all the new stock raises from already public megacaps — warrants more focus. "I just am sanguine about inflation when everyone else is worried about it. I am far more worried when it comes to stocks about SpaceX. Everything speculative is being sold. I think that's because there's a lot of hot money that wants to be in the