“In the 1990s, some smart economists declared inflation dead,” writes E.S. Browning in today’s Wall Street Journal.

“Recent numbers, however, have indicated that, maybe, just possibly, it’s aliiiiiive.”

“Consumers are gritting their teeth at the price of gasoline. Companies are paying more for things such as chemicals, metals and shipping. Investors are starting to wonder whom they should believe about the inflation outlook — the reassuring analysts or the worrisome numbers.”

“So far, a lot of money managers are persuading themselves that it is all right to look past the numbers and rely on analysts’ assurances that the recent jump in inflation is temporary. Still, even some of the optimists acknowledge the numbers can’t be ignored. As this year has progressed and the inflation numbers have begun to mount, both the bond market and the stock market have hit head winds.”

” ‘Wherever we look, we are getting an acceleration of inflation as reported in the statistics and as reported in anecdotal evidence,’ says David Kotok, president of money-management group Cumberland Advisors in Vineland, N.J. He still believes this is just a brief spurt, one that the Federal Reserve has intentionally created with an easy-money policy aimed at getting the economy back on its feet. If inflation turns into a more lasting problem, he says, it will become a serious obstacle for both stocks and bonds. ‘The Fed won’t let inflation be 4% on a lasting basis. It will let inflation be 2%,’ Mr. Kotok says.”

“Inflation, after dawdling in the 2% range for two years, suddenly has pushed to the 4% level. Based on reported figures for the first four months of this year, consumer prices have been rising at an annual rate of 4.4%. Data for May aren’t in yet, but signs indicate the uptrend continued during the month.”

“The inflation burst is far from the levels of the 1970s and 1980s, when inflation pushed into double digits and helped create one of the nastiest, longest-running bear markets in stocks of the postwar period. Still, recent inflation news provides clear evidence that things aren’t moving in the right direction.”