CPI Release

Core CPI contracted by .1% representing the first contraction in core CPI since 1982. The broader CPI rose .2%, mainly on energy. I commented earlier in the week that based on input prices from the export/import price indexes that we'd probably see higher number in the producer price index than in the consumer price index. High excess capacity and a high unemployment and output gap probably contributed to the negative affects on CPI. These numbers aren't particularly surprising considering the Fed's continued policy on maintaining a low federal funds rate. I wonder what Hoenig has to say about these numbers...