Jim Cramer reacts to red-hot inflation number: 'The market took it in stride'

Inflation grew at the fastest rate in more than a decade last month, but CNBC’s Jim Cramer called it the worst kept secret on Wall Street and said the stock market took it in stride.

The consumer price index, which measures the cost of a basket of goods like food and energy, increased 5% year-over-year in May, according to the Labor Department. While high, that was just a bit above the 4.7% gain expected by a Dow Jones survey.

“When everyone expects an outrageous government statistic, then it isn’t actually outrageous when you get it,” he said on “Mad Money.” “So when the Labor Department reported a red-hot inflation number this morning … the market took it in stride.”

Inflation came in at the hottest rate since August 2008, yet the S&P 500 rose 0.5% to a record close of 4,239.18.

The Dow Jones Industrial Average inched up 0.1%, or 19.10 points, to 34,466.24 and the tech-heavy Nasdaq Composite ended at 14,020.33, a 0.8% gain. Both are within 1% of their best closes.

Despite rising prices, the Federal Reserve is unlikely to change its position on interest rates, Cramer said. Central bank officials plan to keep rates at near-zero levels to make room for the U.S. economy to rebound from last year’s Covid-19 downturn.

“There are too many things that went wrong last year, and most of them won’t be solved by higher rates,” Cramer said. “Businesses just weren’t prepared to handle such a strong economy, but that’s a high-quality problem and they don’t need a rate hike to work things out. Time will do it for them.”

Fed Chair Jerome Powell said the central bank would allow inflation, which he thinks will be transitory, to rise above its 2% target. The fed funds rate, which influences lending, won’t see a hike until the labor market bounces back in full, the Fed said.

The country has more than 7 million jobs to recover to meet that goal, with an unemployment rate or 5.8% last month.

“I think Jay Powell’s gradual approach is prudent. I’m betting he’s going to be dead right,” Cramer said.

Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.


Connect with CNBC News Online

#CNBC
#CNBCTV

[j.milleraabamsc]

After we're done with AMC, we willl exclusively focus on traditional investing. You're right, Jim. That said, shorts need to be squeezed and change needs to happen in the equities market

[fate]

$AMC help us fight with the Corrupt Wall Street

[omegabat]

Acts like he helps he is one of the Wall Street guys

[hostiliscivitas]

Inflation is transitory. It's transitioning into hyperinflation

[jamieb]

"Think you holdin weight? Then you havn't met the apes" R.I.P. DMX

[gopro_audio]

The Simpson's say Jim is going to prison.

[ithofnov]

The restaurant part is wrong. In the restaurant I work we need to raise price not because of lack of demand but because of lack of produce. We had to take chicken wings out of the menu because it has gone up 40% per case

[gatsbyofhouston]

Your mission is simple. To help the Hedges make a Ton of illegal Money. #NAKEDSHORT. YEAHH..

[chungching]

Skillz and palantir is way undervalued

[JohmathanBSwift]

So the expectation now is for it to moderate, then reside to normalized levels, because it is at peak,
and because of this rates will remain low.
In September people will have to go back to work, and because of this, the incentives will diminish
keeping labor costs capped, or reducing them to normal levels.
What if oil remains in the range of 62 to 89, but wages go back to normal levels ?
Won't the input costs for creating goods remain, even though the supply has increased .
I'm not sure myself, just asking.

[tnakatak]

He's just cherry-picking data points to support his view

[zackwang]

Why do americans even worry about inflation? Put more tariffs on Chinese products! America is winning! 😂

[jbake]

I trade "MEME" stocks every day from 4:00 am until 8:00 am and I think you are one of our supporters actually. Not all of us "smooth brained apes" hate you. I don't

[TheZacman]

People are going to want to take their profits from their stocks before their value in dollar terms goes down due to inflation.

[AdmiralShamayam]

His other mission is to block 💀 you on Twitter if use the Ralph Wiggins gif saying Hi Jim #HiJim

[RichardWilson]

Luxury or no luxury always be proud of your brand and try working to improve. I love luxurious lifestyles. All thanks to crypto I just got my first Lamborghini 💝. My advice to y'all invest in cryptocurrency or gold.

[boardgamerants]

What about the money supply issue? This seems to be a favorite ignored subject that is not transitory in our age of QE infinity.

[charlesdidonato]

Airlines have taken on so much debt, they will continue to raise prices because they have too!

[MrSCRIBR]

You can’t print excessive money and retain low inflation

[djayjp]

Is it due to a supply bottleneck? If yes, then it's temporary. Makes perfect sense.