Well, inflation clocked in at 5.4% in May, reigniting fears that rising prices are an endemic challenge. But frankly, the stock market seems to have shrugged the news off, with the major US indices down about a third of a percent the day the news came out.

And economists were quick to downplay the June inflation spike. Prices were sharply higher in several areas, such as hotels and airfare, that were down sharply a year earlier due to the pandemic. The economic consensus seems to be that the June number was a blip rather than a trend. I hope the economic consensus is correct.

I’m worried by consistently rising home prices, which tend to be underrepresented in the inflation numbers because the government has a complicated way of measuring “imputed rents” to offset higher home prices with lower interest rates, which reduce home payments for homebuyers financing their purchase with a mortgage. Personally, I think they should just measure the rise in home prices and not try to “impute” the impact of other economic factors on the cost of housing. But that’s an argument for another day.

At the moment, I’m pleased my dividend-heavy stock portfolio hasn’t taken more of a hit from rising inflation. Only my financial stock, Wells Fargo, and a REIT, Kimco, declined significantly today, about 2% each. Otherwise, my portfolio hung in there with only fractional price declines. And my tech stocks actually saw small gains on the day.

Still, inflationary expectations are a threat to dividend paying stocks, so I’ll be keeping a close eye on things.

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