What's going on?

No pressure, guys: fresh data on Wednesday showed the prices of US goods and services ticking higher at their fastest rate in more than a decade last month.

What does this mean?

America�s spending big at the moment, with inflation rising by the most since 2009 in April. Between strong demand, supply bottlenecks, and the trillions the US government�s pumped into the economy, consumer prices increased 0.8% last month compared to the one before � while the �core� inflation measure (which excludes unstable food and energy costs) climbed at its fastest since 1982.

The jump was much bigger than economists expected, and well above the Federal Reserve�s (the Fed�s) target. That could spell trouble for investors: if prices rise too rapidly, the US central bank might hike interest rates sooner than expected in a bid to cool the economy down. And that�could prompt investors to ditch suddenly more expensive-looking stocks.

Why should I care?

For markets: There�s some guesswork involved here.

The inflation conundrum is complicated by the �base effect�. April inflation was up 4.2% on a year ago, sure, but prices back then were depressed by the pandemic-induced economic shutdown. That artificially low base will continue to muddy the all-important annual price-rise waters next month too � and allow the Fed to argue that any pickup in inflation is only temporary.

The bigger picture: Things should settle down.

Rising inflation expectations have played a big part in the recent tech-stock selloff, but they�re not the only culprit. High demand for �put options� � which provide protection against those selloffs � has forced market makers to limit their risk by taking the other side of the bet, in turn increasing the swings in tech stocks� prices. Still, that volatility should start to ease when about a third of the options contracts in question expire on May 21st.