Consumer prices are showing a little pressure but not a great deal. Though the CPI slipped 0.1 percent in December, the core rate did edge 1 tenth higher. Year-on-year, both rates are inching higher, at plus 0.7 percent for total prices, up 2 tenths from November, and at 2.1 percent for the core, up 1 tenth in the month and right at the Fed’s 2 percent inflation target. Still, the core reading is well short of the strength needed to point to similar strength for the Fed’s preferred core measure, the PCE core which has been showing little life and trending below 1.5 percent.

Energy, of course, continues to pull down prices, down 2.4 percent in December for a year-on-year minus 12.6 percent with gasoline down a year-on-year 19.7 percent. And these readings may well move further lower in the January report this time next month. Food prices fell for a second month, down 0.2 percent and are up only 0.8 percent on the year.

Housing and medical care both showed gains in December but only at 0.1 percent each with the year-on-year rate for housing at plus 2.1 percent and medical care at plus 2.6 percent. These rates, which are at the top of series right now, are no more than moderate.

Lack of inflation, the result of both falling energy and commodity prices and also general weakness in demand, is a major policy risk for the FOMC which meets later this month. Some FOMC members have been expressing doubts that inflation will begin to move to target, and today’s report does little to allay those concerns.