New Delhi, June 11 -- U.S. inflation has exceeded the Federal Reserve's 2% annual target for more than five years and did so again in May, rising 4.2% on an annual basis, as measured by the consumer price index. Similarly, economists expect the personal consumption expenditures price index, the Fed's preferred inflation measure, to top 4% year to year when the Bureau of Economic Analysis reports the May reading later this month.

It is tempting to call 3%, or even 4%, the new 2%, as some Fed watchers have snidely asserted. But the Fed's failure to meet its own inflation target is no laughing matter. Missing the mark poses a serious credibility issue for the central bank. It also threatens the U.S. consumer's financial health, on which the...