The Dow Jones Industrials (DJINDICES:^DJI) were moving in an aimless manner on Tuesday, up just 14 points as of 12:30 p.m. EDT. After substantial gains over the past few months, stock investors seemed more inclined to avoid making major commitments to the market as they weigh countervailing factors in the economy. One of those factors gave investors a shock this morning, as May's Consumer Price Index reading rose 0.4% from the previous month, making some nervous about an upsurge in price pressures. Yet before making big conclusions about the impact of inflation readings on the Dow, it makes sense to take a closer look at the report and go beyond the headline figures.

The Fed must deal with inflation concerns. Source: Wikimedia Commons.

Why prices rose
The CPI's May gain was the biggest since early 2013. But as troubling as the rate of the CPI increase might be, what's potentially more problematic is the fact that the index's gains weren't tied to particularly huge increases in any one sector. Food prices rose 0.5%, with those consumers who were trying to economize by eating in facing an even steeper 0.7% increase. Energy costs rose 0.9%, with price increases for gasoline and electricity more than offsetting lower costs for natural gas. Even when you take out those volatile components, core inflation rose 0.3% for the month.

From a longer-term perspective, the inflation rate appears to be moving high enough to counter any fears among Federal Reserve officials about deflation. With a year-over-year change in the CPI of 2.1%, the index is actually above the 2% Fed target for the first time since late 2012. Even core inflation rose at a 2% annual clip, indicating that while the Fed has met its goal of keeping price increases on target, it will have to make sure that no further upward momentum carries prices even higher.

Source: Delta Air Lines.

That could prove difficult in certain markets. Prices of beef, pork, and eggs are up double-digit percentages from year-ago levels, and fresh fruits have seen substantial increases as well. In addition, airline fares jumped almost 6% on a seasonally adjusted basis for the month, supporting the strength in the Dow Jones Transportation Index (DJINDICES:DJT). Delta Air Lines (NYSE:DAL) has had some success this year in initiating fare increases, and with capacity at relatively tight levels, airlines have been able to make increases stick in many cases.

For now, a single month's reading of the Consumer Price Index shouldn't shake confidence among investors in the Dow Jones Industrials. For the most part, the Dow's components have enough pricing power to push through cost increases to their customers. From a longer-term perspective, if monthly increases of this size repeat, then it'll be time to start worrying about inflation's impact on the Dow's bull market.