Consumer Prices (Jan.)

The decline in headline CPI inflation to a 19-month low of 1.6% in January, from 1.9%, was due principally to a sharp decline in energy prices. Excluding food and energy, core CPI inflation remained unchanged at 2.2% where it has been broadly stuck for almost a year now, suggesting that the dangers of any significant break out above the Fed’s target are fairly slim at this stage. That provides support for the FOMC’s “patient” stance, as it frets about the sudden economic weakness in Europe and Asia.