February 27, 2007—The top-line consumer price index rose 0.2% in January while the core CPI increased 0.3%, slightly above expectations. The Conference Board's Index of Leading Indicators grew 0.1%, a deceleration from the 0.6% rise in December. Lastly, business inventories remained unchanged in December while the inventory-to-sales ratio fell from 1.30 to 1.28.

Consumer Price Index
The consumer price index rose 0.2% in January following a 0.4% increase in December. A 1.5% drop in energy prices helped restrain the growth in the overall CPI. The core CPI, which excludes volatile food and energy prices, accelerated to 0.3% growth after three consecutive months of modest 0.1% increases. On a year-ago basis, the top-line CPI has increased 2.1% while the core CPI is up 2.7%. Moderate inflation numbers are expected going forward into 2007.

The Conference Board Leading Indicators
The Conference Board's Index of Leading Economic Indicators inched up 0.1% in January following an upwardly revised 0.6% increase in December. Four of the ten components made positive contributions to the index, led by a drop in jobless claims and increase in money supply. A shorter production workweek and a drop in building permits were the biggest drags on the index. Lastly, the six-month annualized growth rate increased to 1.5% from 0.7% the previous month.

Business Inventories
Total business inventories remained unchanged in December. Manufacturing inventories decelerated to 0.1% growth after rising 0.2% in December while retailer inventories increased 0.3% following a 0.4% decline the previous month. Concurrently, wholesaler inventories fell 0.5% after jumping 1.1% in November. Lastly, the I/S ratio fell from 1.30 to 1.28 in December.