The 12 month CPI came in at 0.0% for Jan. '09. As often discussed,
the rapid deceleration of inflation measured yr/yr primarily reflects
the Half 2 '08 blowout in the commodities markets, especially fuels.
Worth noting is that the 12 month change for the CPI ex. fuels and
foods has dipped to 1.7%.
My inflation thrust gauge is now a deflation thrust measure and
continues to point to mild 12 month CPI deflation in 2009. Another
longer term measure I follow weighs commodities less heavily but
also seems to be pointing to mild deflation (ECRI).
The CPI has fallen about 4.0% from its all time peak set 7/08. Most
economists now know that the 12 month CPI will show deflation
unless the CPI accelerates up over the next 6 months. So, from
here, there will be more focus on the month-to-month change in
the CPI to determine whether the recent sharp decline was but a
shorter term phenomenon.
The hot button component for the increase in the CPI from Dec. ' 08
was the gasoline price, which has moved up from $1.62 a gallon to
$1.92. There will be little concern unless the gasoline measure
surges much further.
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