Get Ready For The Worst Inflation Number In 6 Years

The crash in oil prices might be good for consumers, but it's terrible for inflation data.

The US Bureau of Labor Statistics is set to release the consumer price index on Friday morning at 8:30 ET. The index is a measure of consumer prices, and the most popularly cited measure of inflation.

Expectations are for headline inflation to fall 0.4% in December compared to the prior month, which would be the largest month-on-month decline since December 2008.

"Core" inflation — which strips out the cost of food and energy and is the number more closely watched by economists — is expected to rise 0.1% in December and 1.7% when compared to last year.

Most of this decline in inflation is expected to be a result of the drop in oil prices, which has in turn sent gas prices to multiyear lows.

In a note to clients ahead of the report, Brian Jones at Societe Generale wrote that, "Reflecting a projected 12.1% dive in seasonally adjusted gasoline pump prices, the CPI energy cost gauge likely fell by 5.4%, shaving one-half percentage point off the headline measure last month."

And so decline in gas prices will be responsible for all of the decline in the headline index come Friday morning.

Core" inflation — which strips out the cost of food and energy and is the number more closely watched by economists

Core inflation.. That's the one you see on the NEWS when they want you to forget the price increase in food and gas. The increases anyone who actually shops every week sees.
Increases such as 1 lb pkg of pasta is now 12 oz, the 1 qt mayo is now 30 oz, doz eggs was 1.00, now 1.30. Beef up 30%.
Gas way up.
Simple gov manipulation of the facts, who'd thought?
The MSM parrots pass it on.

Well, pardon me, should have said ONE of the major reasons.

But realize, even the fortunate folks with jobs (not affected by regulations and unemployment) have been just paying bills, getting a little food and gas...and that’s it. Talking about the mainstream population here. No extra money to spend at all. Just getting by. That’s millions of people not being able to stimulate the economy.

High cost of food and gas has had a devastating impact on their lives. Lower prices will definitely help the U.S. economy.

Buying CSFE (cheap stuff from elsewhere) does what for our economy? A few get a piece of the markup, but no wealth is created. If we aren't making it here, we're sending it there, not spending those dollars multiple times before they move on.

Cheap gas is real nice--if you have an income--a cheap commute only works if you have a job.

Now, let' look at some real numbers.

If you are driving 15,000 miles a year, in a vehicle that gets 25 MPG, your annual savings will be 15000/25 times the number of dollars per gallon you 'save'. If you are getting your fuel at two dollars cheaper, that's 1200 dollars a year, 100 dollars a month, or (roughly) 25 bucks a week. That will put a few burgers on the grille over the weekend, but not a heck of a lot more.

Now, I have lived so lean that would seem like a fortune, but that isn't going to buy any new cars. In fact, if the EPA (Obama and the ecowhackos) get their way, you'll need it to pay the light bill.

Ultimately, I'm not too worried about the oil patch. It has survived ups and downs before, as have all the folks who work there. some fat will be trimmed, incredibly efficient drilling and completion techniques will be made even more so, and life will go on.

What does concern me, is that these savings aren't going to open up a few million new jobs, aren't going to put the rest of America back on the track of creating wealth, and are just going to result in a modest binge of minor spending. There is already talk of taxing fuel even more, which will snatch the small savings from the very hands lauding cheaper fuel. Oil dropped and the Feds were first in line to suck the money out of your pocket.

That is the other 'growth' sector in the economy: more government, more regulation, and more ways to hand out Americans' hard earned dollars to people who have no business being here in the first place. Call it "paybacks" for European colonialism, 'reparations', or just screwing the taxpayer, but it is a redistribution of wealth on a scale never before seen, not just stopping with the current taxpayer, but amassing a non-serviceable debt that will be the downfall of our country.

“That is the other ‘growth’ sector in the economy: more government, more regulation, and more ways to hand out Americans’ hard earned dollars to people who have no business being here in the first place.”

Agree with you totally. Truly sad what is taking place in our country. Seems there is very little people can do. Even when there is victory at the ballot box, little change (for conservatives) takes place. Government regulations have turned in to a menance. The oil patch will most likely survive as you said. And in the meantime, several million Americans are getting some much-needed relief at the gas pump. Now, next step is conquering those high food prices...

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