The importing of Japan's deflation continues: in January headline consumer prices as well as prices excluding food and energy rose by 0.1%, in line with expectations, and down from a downward revised 0.2% in December. The annual increase in prices rose modestly from 1.5% to 1.6%, but still below the Fed's 2.0% target. The main reason for the increase? Why the polar vortex, and specifically soaring electricity prices as a result of the surge in nat gas. "Increases in the indexes for household energy accounted for most of the all items increase. The electricity index posted its largest increase since March 2010, and the indexes for natural gas and fuel oil also rose sharply. These increases more than offset a decline in the gasoline index, resulting in a 0.6 percent increase in the energy index."

Of course, H readers already knew this courtesy of our report on electricity prices charged by ConEd which as we showed yesterday soared to what may be an all time monthly high:

The headline monthly price increase has been in a range of 0.0% to 0.2% for the past 7 months.

Some other observations:

The index for all items less food and energy also rose 0.1 percent in January. A 0.3 percent increase in the shelter index was the major contributor to the rise, but the indexes for medical care, recreation, personal care, and tobacco also increased. In contrast, the indexes for airline fares, used cars and trucks, new vehicles, and apparel all declined in January. The food index rose slightly in January. The index for food at home rose 0.1 percent, with major grocery store food groups mixed.

The all items index increased 1.6 percent over the last 12 months; this compares to a 1.5 percent increase for the 12 months ending December. The index for all items less food and energy has also risen 1.6 percent over the last 12 months. The energy index has risen 2.1 percent over the span, and the food index has increased 1.1 percent.

The categories summarized:

Of note: in addition to the annual decline in commodity prices, the 0.3% drop in apparel prices over the past 12 months confirms that apparel retailers have zero pricing power and that anyone hoping for a rebound in the discretionary retail space, at least that not targeting the 0.01%, is in for a long wait.