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Inflation remains relatively tame

The headline Consumer Price Index in December was flat, compared to expectations of a 0.1% increase. On a year-over-year basis, the CPI has fallen from a high of 3.9% to 2.4% in the past three months. As this chart shows, all of that decline was due to energy prices, which have been relatively flat to down for the past three months (oil was up but gasoline prices have fallen and natural gas prices have dropped significantly). The CPI ex-energy has continued to pick up.

Inflation is not dead, deflation is not a threat, and so far inflation has not been the problem I thought it would be. Thank goodness.

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