With inflation having been the buzzword for the last three years, we continue to monitor it’s attenuation toward the Fed’s 2.0% target.  Because reported inflation tracks the cost of everything under the sun, there have been thousands of indices developed to watch the ebb and flow of pricing on widgets, doohickeys, and thingamabobs. To make sense of all that information, there are dozens of universally accepted valuation monitoring indicators that compile the expenditure groupings into classes. These compendia are abridged further to comprise one quarterly “Inflation Rate”, of which the last reading was December at +3.4%.

That 3.4% number in December represented a 0.3% increase from the previous report, which is a move in the wrong direction if we want inflation to go down, not up.  With grandpa inflation popping its head out with the frequency of the changing seasons, we look with apprehensiveness for trend harbingers within subsets of published statistics.  One such datum dollop that’s of particular interest to everyone who spends money is the Consumer Price Index (CPI) and it comes out next Tuesday.

Last month, the CPI had increased with the exact same momentum as the overall inflation rate in the US, which is not uncoincidental given that consumer spending accounts for 68% of the entire national GDP.  Having said all that, the Consumer Price Index is expected to drop about 1/2% when it’s announced next week. That’s great news for the inflation hawks who, while not announcing any official interest rate decisions until late March, continuously broadcasting their their intentions at speaking engagements across the country on a daily basis. A consumer spending number back in the 2’s will be hard to squawk at.