Sounds like the exercise is working! Muscle weighs more than fat. Sounds to me like you're losing body fat and gaining lean muscle. If you have trimmed down and gained weight it's probably a good thing. More lean muscle (which explains the inches lost) will increase your metabolic rate and help you burn fat faster.
Don't be a slave to the scale, the tape measure is as good a tool for measuring your success. Don't get me wrong, I weigh every day, but if in a week my weight has barely moved and my measurements are down I'm still a happy girl. It sounds like you are doing what we all strive for and that's reducing body fat and increasing lean muscle.
Yep, you've gained muscle. Measurements mean more than weight numbers, anyway - it's not about what you ACTUALLY weigh, but what you APPEAR to weigh! Body fat percentage means so much more.
so glad I tumbled across this thread, my scale went up to , but my inches went down. I have been pumping some weights and doing some squats so yes hopefully my muscle mass is going up. Great thread.
Unfortunately, it's impossible to gain five pounds of muscle in a week -- darn it!
Even with perfect, squeaky clean nutrition and a carefully planned, intense and heavy weight training routine, a woman might gain five pounds of muscle in maybe six months, perhaps a bit longer.
It sounds to me that it's more likely water retention. As the other posters said, measurements are what matters here and they're going down, so hooray!
Ack! Weight went up, measurements went down!
Body fat percentage means so much more. 
