Headline inflation, measured by the Consumer Price Index (CPI), was unchanged in December, while the ‘core’ number that excludes food and energy was slightly higher (+0.1%). During the month, rent inflation was bit higher, but clothing and auto prices fell.
The year-over-year CPI number for 2011 was +3.0% (+2.2% for core CPI). We’ve seen the rate of inflation abate in recent months, as food prices have moderated and the rise of certain energy components (WTI crude) has been offset by steep declines in others (natural gas). While a little bit of inflation is a helpful and positive byproduct of economic activity, low levels overall act as a much better input than high inflation—obviously—as looked at by business and consumer budgets. Lower inflation inputs should also help boost corporate earnings as they translate through the process. Read more