An Inflation Update

Yesterday, the markets were in an early uproar because of the inflation news for January; the one month figure was 0.1% higher than had been expected.  This morning I looked at the oil, gasoline and natural gas futures.  Since the end of January, each of these futures are down about 10%.  This will mean lower prices for consumers.  It will also mean lower prices for businesses and will translate into lower prices for all sorts of goods.  While energy costs fluctuate to a much greater extent that most other prices, this drop in the futures indicate that the increase in February's CPI may be lower than the one for January (when energy costs were much higher.)  It's just another reason why a one month change in the CPI is essentially meaningless when it comes to predicting where the economy or even the Federal Reserve is going for the rest of the year.