Inflation (or Lack Thereof)

According to the BLS, inflation blipped up in December:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in December on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.5 percent before seasonal adjustment.

Much of that increase was due to the cost of energy, which rose 7.7% in December (gasoline prices were up 13.8%).  The "core" CPI, which excludes food and energy prices, was up 0.1% in the month, and 0.8% for the year. 

While there was some energy-induced inflation in the month, the annual rates of change in both overall (red) and core (blue) inflation remain subdued:

Those rates remain well-below the Fed's informal 2% target. The traditional inflation-unemployment dilemma of monetary policy just isn't an issue for the Fed right now.

The increase in energy prices is a sign of a recovering global economy, but it has a negative impact on the trade balance (the NX component of GDP).