Little Bits of Inflation

We mentioned last week that the spread on TIPS suggested that most investors didn't see inflation looming as a serious problem, and the inflation figures released by the Labor Department on Friday supported that. The consumer price index rose by a negligible 0.2 percent in January, while the core inflation rate fell by 0.1 percent. The difference between the two is that the core inflation rate doesn't include food and energy costs, which are considered too volatile, but the are included in the consumer price index.

The Labor Department doesn't just offer those two inflation figures but a whole range of them, sliced and diced in more ways than you'd think possible. So the food index, which rose 0.2 percent for the month, breaks down as a 0.4 percent for food at home, but just a rise of 0.1 percent for food away from home. That's a switch from the previous 12 months, in which food at home dropped 2.0 percent while food away from home rose 1.6 percent.

The biggest reason for the rise in food prices was the dairy and related products index, which rose 2.1 percent in January. That's closely followed by the fruit and vegetable index, which rose 1.3 percent - but we can see that the real culprit there was the fruit index, which was up 2.8 percent. These increases were counteracted by a drop in the cereals and bakery products index, which fell 0.5 percent on the month. Looks like this is a good time for a sandwich and some Twinkies.

For more on the inflation details, see the Labor Department report here.