Abnormally Warm Weather Keeps Inflation In Check As Energy Prices Rise, Core Inflation Highest Since September 2008

Submitted by Tyler Durden on 02/17/2012 08:43 -0500

• Ben Bernanke
• Bureau of Labor Statistics
• China
• Core CPI
• CPI

Bernanke, and his recent inflation targeting plan, should be delighted with today's CPI number which while missing headline expectations of a 0.3% increase M/M and printing at 0.2%, rose 2.9% year over year, just higher than consensus, although down from December's 3.0% - the primary reason for the "miss" being a drop in utility gas services courtesy of April weather in January and February. On the other hand, core CPI continues trends ever higher, and is now up 2.3% Y/Y, an increase of 0.2%, in line with expectations, and up from December's 0.1%. This was the highest Y/Y number since September 2008. The good news is that the possibility of further QE is still embedded in the number. The bad news, is that WTI is about to take out $103 courtesy of the global central bank pump discussed yesterday, and allegations that CPI reflects merely some irrelevant hedonically adjusted number spring up again.
Core CPI:

From the release:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment.

The indexes for food, energy, and all items less food and energy all rose in January, each increasing 0.2 percent. Within the food group, the index for food away from home increased while the index for food at home was unchanged; within the energy group the gasoline index increased while the index for household energy declined.

Within all items less food and energy, the apparel index rose sharply, and the indexes for shelter, recreation, medical care, and tobacco increased as well. The indexes for used cars and trucks and for airline fares both declined, while the new vehicles index was unchanged.

The all items index has risen 2.9 percent over the last 12 months, a slight decrease from last month’s 3.0 percent figure. The index for energy has risen 6.1 percent over the last year and the food index 4.4 percent; both figures are slight declines from last month. The index for all items less food and energy has risen 2.3 percent, its largest 12-month increase since September 2008.

The biggest price increases were in Apparel (China still reexporting simmering inflation?) and Energy services, although the biggest drop was in the Utility Gas Services subcomponent - thank you warm weather.