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By New_Deal_democrat February 20, 2014 1:44 pm
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YoY CPI up 1.5% in January, still on track for +1.0% in February

Last week I wrote that this winter's continuing cheap gas prices may give us the lowest inflation rate in 50 years, excluding the deflation during the Great Recession.

We now have the official CPI for January, and 3 of 4 weeks for February, so here is an update.

January inflation, at +0.1%, was 0.2% higher than I thought it would be, but -0.1% below the consensus. December was also revised downward, making it in tune with my forrecast.  The net result is that YoY inflation including January is +1.%.

Gas has now begun climb into spring, as winter formulations are being replaced with summer formulations at the refineries.  Even this climb is a little subdued, as in the last reporting week, gas prices only rose $.07 to $3.38.  If they rise a similar amount this week, then February's average will be $3.357, or a 1.3% increase in gas m/m.  This will translate into a +0.3% CPI both seasonally and non-seasonally adjusted, for a YoY inflation rate of +1.0%.

This isn't quite as good as I had hoped, but it will still be more than 1% less than the YoY increase in average nonsupervisory wages, so will be a boon to consumers.

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