This morning's report on January growth in the Consumer Price Index bolstered the case that inflationary pressures remain well contained, and took some of the sting out of last week's news on the PPI. The "headline" CPI actually came in a little lower than expected, and the usual measure of core inflation (constructed from the CPI excluding food and energy components) was about in line with what the experts were looking for. From TheStreet.com:
Consumer prices remained under control in January, easing concerns about inflation triggered by last week's report on producer prices.
The government said the consumer price index rose 0.1%, half of what was expected by economists. Core prices excluding energy and food costs rose 0.2%, as expected.
The core performance may have been expected, but it did not indicate any retreat in the longer-term inflation picture. The median CPI -- a measure of core inflation constructed at the Cleveland Fed -- confirmed the impression that the inflation trend, while still modest, has slowly drifted upward. Here's the summary, from the Cleveland report.
| Percent Change From Previous Month | ||||||
| August | Sept. | Oct. | Nov. | Dec. | Jan. | |
| CPI | 0.1 | 0.2 | 0.6 | 0.2 | 0.1 | 0.1 |
| CPI less food & energy | 0.1 | 0.3 | 0.2 | 0.2 | 0.2 | 0.2 |
| MEDIAN CPI | 0.2 | 0.1 | 0.2 | 0.1 | 0.2 | 0.3 |
| Percent Change, Last 12 Months | ||||||
| August | Sept. | Oct. | Nov. | Dec. | Jan. | |
| CPI | 2.7 | 2.5 | 3.2 | 3.5 | 3.3 | 3.0 |
| CPI less food & energy | 1.7 | 2.0 | 2.0 | 2.2 | 2.2 | 2.3 |
| MEDIAN CPI* | 2.5 | 2.4 | 2.3 | 2.2 | 2.3 | 2.4 |
* Seasonal factors have been recalculated by the BLS to reflect developments in 2004. As a result, some of the figures in these tables may differ from previous press releases.
Here's a taste of the chatter in chattering-land. From Bloomberg:
"The numbers today were quite tranquil,'' former Federal Reserve Governor Lyle E. Gramley said in an interview. "We're in great shape."...
"This is a good report given what we expected to see,'' said Joel Naroff, president of Naroff Economic Advisers in Holland, Pennsylvania, and the top economic growth forecaster in Bloomberg News surveys for the year ended in June, in an interview...
"The bond market reacted positively to today's 0.2 percent increase in core consumer prices out of relief that it wasn't higher,'' said Michael Carey, chief economist at Calyon Corporate & Investment Bank, in New York...
But not everyone is convinced things are so cheery.
"Enjoy the 0.1 we got,'' said Brian Jones, an economist at CitiGroup Global Markets in New York, in an interview. ``The good news that we got this morning, we are going to lose it next month.''
Reuters found someone with a similar sentiment:
"Inflation at the end of the day is headed higher, it's just not going to happen that dramatically this year," said Mark Vitner, an economist at Wachovia Securities in Charlotte, North Carolina. "This leaves the Fed exactly where they are."