In contrast to the yearly trend in producer prices, U.S. consumer prices rose at a slightly lower rate in January. Over the 12 months ending in January, the Consumer Price Index increased at a 2.6 percent rate, a tenth of a percent lower than the rate booked in December. Wholesale prices, measured by the Producer Price Index for Finished Goods, stepped up by a tenth of a percent, at 4.6 percent rate.

Inflation's a hot topic ‘round here. Has been for quite a while. There has been, especially, a lot of heat and light generated about the Consumer Price Index. Many people distrust the government's numbers.

Despite year-over-year increases in goods prices, real-time measures of monetary inflation gave the Fed a little more room to maintain its accommodative stance this week. Producer prices for finished goods rose 4.4 percent over the past year, according to a U.S. Bureau of Labor Statistics report released Tuesday. Earlier, the BLS reported consumer prices rising at a 2.7 percent annual pace.

Monetary indicators, supplied by the gold and foreign exchange markets, gave the Fed more ammunition this week for an eventual withdrawal of its accommodation.

Year-over-year price inflation officially returned to the U.S. economic landscape this week when the Bureau of Labor Statistics released Producer Price Index and Consumer Price Index data for November. The PPI for finished goods (PPI-FG) rose 2.4 percent since last November, the first positive reading in a year, while the CPI for urban consumers (CPI-U) broke into positive territory for the first time since February, with its 1.8 percent hike.

Last week was definitely a record-setter. Before Friday's Dubai World scare (see this week's feature, "Gold Makes A Near Clean Sweep"), gold prices broke into new high ground vs. the U.S. dollar, the euro, the Swiss franc and the pound sterling.

Reading the headline numbers from this morning's report from the U.S. Bureau of Labor Statistics would likely make you think inflation's back. But you may not be positive. Month-over-month, prices measured by the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.3 percent in October, though the index is 0.2 percent lower than its year-ago level.

Oil continued to lead the commodity complex higher this week, coat-tailing, to some degree, on a weakening U.S. dollar.

The waiting game is over. Gold's eased up a bit, allowing crude oil to take the headlines this week. Oil has broken to the upside of a four-month trading range that has the potential to test the $90-a-barrel level.

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