If you follow economic news at all then you likely heard the headlines about inflation this week. The headline story was that 2006 had the lowest inflation rate in years. Well, assuming (and it's a big assumption) that you agree with how the government calculates inflation, that story is technically correct. But what didn't get reported was this:

"According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.3% (3.5% annualized rate) in December...

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.5% (6.7% annualized rate) in December. The CPI less food and energy rose 0.2% (2.3% annualized rate) on a seasonally adjusted basis.

Over the last 12 months, the median CPI rose 3.7%, the CPI 2.5%, and the CPI less food and energy 2.6%."

In the past, later revisions seem to always move the inflation number up. And I don't know about you, but my personal experience says that inflation is alive and well. Just today I went to buy dog food (of all things) and the clerk apologized for the price increase, which was substantial.

On another related note is gasoline. The news talkers are all atwitter over the low oil prices. Talking heads are saying that the impact of low oil prices on the consumer will help the economy yadda yadda yadda.

I don't know about your area, but here in Sonoma County gasoline hasn't budged. In the time that oil prices have fallen 38%, gasoline hasn't fallen at all. If it had fallen equally, gasoline that now sells for $2.65/gal. should be selling for around $2.00/gal. You and I both know that the minute oil prices tick up, the gas station owners trip over themselves to change the pump prices. But on the way down, we hear lots of excuses. So I'm not sure that lower oil prices will mean anything to the economy until/if these prices filter down to the consumer.