Data in past week (retail sales, Empire survey, claims, PPI, CPI) continues to show best of both worlds—economy improving and inflation very low.

Initial claims drop another 5k to 457k.

• CPI unch on headline basis and +0.053% on core.
• Core now 1.3% y/y and has a couple more mths of favorable base effects that should allow it to fall below 1%.
• Core inflation running 0.1% on a 3mth annualized basis!
• OER (unch) continues to hold down the series with apparel (-0.7%) the only notable outlier this month.