The Consumer Price Index data for Januarywas released at the same time as the Monthly and Annual Retail Trade Survey (MARTS) data. The inflation data was rather good, coming in at 1.8% for all items minus food and energy and 2.1% for all items. The "powers that be" were anticipating an annual rate, excluding energy and food, of roughly 1.9%. This makes no sense. What happened? (First graphic is from the report.)

We are Seeing Commodity Deflation and Service Inflation, again. This is a pattern that started late last year. Health insurance finally saw an uptick after months of zero inflation. Medical Care Service, Hospital related services, and Health Insurance are taking a bigger bite out of monthly spending, as their relative importance has risen each of the past two years.

We saw food inflation. This has been an area where we had been seeing "savings." The weighting of the components and the variability of inflation rates between categories make comparing "apples to apples" challenging.

Shelter Inflation remains above 3%.  Shelter takes the largest chunk out of everybody's paychecks. Inventory has been low in the new home market and at historic lows in the existing home markets. Demand has been solid. Strong demand and weak supply will push prices higher.

Inflation is okay. This column published an article by the same name. The trend has been higher. This article was bracing people for the possibility of 3% inflation due to higher participation and a lower effective unemployment rate than what we saw last January.  Relax. We had a period of deflation during 2015. Inflation is okay.

It's the economy.