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Investing Specialists

Spooked about Inflation

Why the CPI could increase more than expected in 2010.

Last week the reported Consumer Price Index for December was up just 0.1% or 1.2% annualized. Economists in general were very pleased.

Even looking on a December-over-December basis, inflation was still a pretty tame 2.7% and ex-food and energy, the numbers looked even better at just +1.8%.

So why am I spooked? In the table below I have reproduced the government's list of inflation by category. I have arranged the lists from deflationary items to the ones with the highest rate of inflation.