While we recognize that the negative year-over-year change in the US CPI may soon reverse given gas prices have risen by nearly 30 cents, we wanted to highlight how rare a negative year-over-year print is in the US. In the post-war period (since 1948) there have only been four instances when the year-over-year change in the CPI was negative: May 1949- June 1950, August 1954 – August 1955, December 2008 – October 2009, January 2015.
Core-CPI has remained relatively steady and was actually 18 basis points higher month-over-month in January. The year-over-year core-CPI has remained between 1.50%-2% for the past two years. Unfortunately, the core-CPI series only goes back to 1958 so we can’t see how low it got in the first two periods when the headline CPI went negative. In October 2009, however, core-CPI printed a year-over-year change 0.60%
The housing component of CPI looks like it should be the headline CPI in the near future. The vacancy rate is at its lowest level since 1995
Lastly, while headline CPI is at lowest level since 2009. Our CPI diffusion index is actually higher than it was in November. The diffusion index looks at the year-over-year change of each component. If it is higher than a year ago it registers +1, if it lower than a year ago it registers a 0.