Great news for American Consumers - the price of the stuff you buy with stagnant incomes dropped in December by 0.1% (missing expectations of a 0.0% move). But what's good for Americans is bad news for The Fed as this is a resumption of deflation from mid-2015, and the biggest miss since January 2015. And then there is the ugly news that behind ths headline is a 3.7% surge in shelter costs YoY.
The breakdown is weak - with energy- and food-related deflation offset by shelter
The all items index rose 0.7 percent over the last 12 months, compared to the 0.5 percent 12 month increase for the period ending November. The food index rose 0.8 percent over the last 12 months, though the index for food at home declined. The energy index fell 12.6 percent, with all its major components decreasing. The index for all items less food and energy increased 2.1 percent over the last 12 months.
Headline CPI dropped mostly due to a -2.4% decline in energy prices in December
The indexes for energy and food both declined for the second month in a row, leading to the decline in the seasonally adjusted all items index. The energy index fell 2.4 percent as all major component energy indexes declined. The food index fell 0.2 percent as the index for food at home decreased 0.5 percent, led by a sharp decline in the index for meats, poultry, fish, and eggs
As Shelter costs rise 3.7% YoY.