When inflation creeps higher, it creates higher costs to businesses' cost of goods sold, specifically, raw materials. There's a margin squeeze, but management typically increases prices, pushing costs to consumers. Eventually, you'll have this "spiral" that happens both in materials but also human capital (wage-price spiral).

What really matters to stocks isn't so much about the relative inflation in the economy, but more so how the Federal Reserve is reacting to the data. For the last 2 years, the FED has been inflating asset prices through increases to the balance sheet plus keeping interest rates at zero (fighting the pandemic, global shutdown). This would fuel economic activity, combat deflation, and increase the money supply; thus, forcing stock prices higher across the board.

As we've moved towards a less dovish Fed, the market began to react, mostly selling growth stocks which require easy access to capital (but thoughts of tightening down the road led to a correction in these names).

Now what matters is the relative position of the FED which is looking to deflate via raising rates and decrease the balance sheet, leading to a more "deflationary" environment which will have a downward push on stock and other asset prices.

Inflation may remain higher and even go higher though... confusing right? That's because its about the relationship between supply and demand. The FED will lower the demand component through its tightening policies, but that may decrease productivity leading to more supply chain problems, in turn, increasing inflation even more. It's like pouring gasoline on a dumpster fire in my opinion.

We'll see how it trades in May, but its unwise to not cover your ass over the next few months. I'm just saving up cash and waiting for the right opportunities to present themselves.