LIVE MARKETS-Price points: CPI, mortgages and Empire State

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PRICE POINTS: CPI, MORTGAGES AND EMPIRE STATE

A trio of indicators visited investors on Wednesday, and three common themes dominated all of them: inflation, inflation and inflation.

Underlying price growth cooled down a bit in December, according to the Labor Department's breathlessly anticipated consumer price index (CPI) USCPI=ECI.

But you wouldn't know that based on the headline numbers.

CPI, which tracks the prices urban consumers pay for a basket of goods and services, heated up on a monthly basis, rising by 0.4%. Analysts expected a repeat of November's 0.3% print.

Year-on-year increased 2.9% as expected, 20 basis points warmer than the prior month.

Energy prices, which jumped 2.6% can be blamed for to the warming trend.

Stripping away volatile food and energy prices, core CPI cooled down on monthly and annual bases, rising 0.2% and 3.2%, respectively.

Consensus called for a year-on-year core reading of 3.3%.

"Core Inflation isn't accelerating and that's the story," said Jamie Cox, managing partner for Harris Financial Group. "The market may have had its hair on fire about inflation running away again, but the data do not support that conclusion."

Line-by-line, a 4.4% spike in gasoline prices and a 3.9% surge in air fares were the outliers.

The crucial shelter and services segments both held steady, rising 0.3%. Annually, shelter and services prices are up 4.6% and 4.4%, respectively, running much hotter than the core number.

Likely contributing to shelter inflation this month, demand for home loans surged last week, despite the fact the cost of financing them poked its head above the 7% level, according to the Mortgage Bankers Association (MBA).

The average 30-year fixed contract rate USMG=ECI rose by 10 basis points to 7.09%, rising above 7% for the first time since last July.

Even so, applications for loans to purchase homes USMGPI=ECI jumped 26.9% while refi demand USMGR=ECI soared 43.5%.

What gives, MBA?

Joel Kan, MBA's deputy chief economist, chalks it up to seasonal volatility, adding that at this time of year, "it can be more helpful to focus on the level rather than the percent change."

Fair enough. Compared with the same week last year, the 30-year fixed rate is 34 bps hotter.

Over the same time period, purchase applications are down nominally, while refi demand is up 22.2%.

Lastly, factory activity in New York State has zigged this month according to the New York Federal Reserve, when analysts expected it to zag.

The NY Fed's Empire State index USEMPM=ECI dropped to a reading of -12.6 from December's upwardly revised 2.1.

Economists predicted a move in the opposite direction, rising to an even 3.0.

An Empire State reading below zero indicates a monthly contraction in manufacturing activity.

Below the headline, new orders plunged into contraction, while prices paid - an inflation predictor - jumped eight full points to a hot 29.1.

(Stephen Culp)

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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:

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BANK OF JAPAN HIKE IN PLAY NEXT WEEK - CLICK HERE

HEALTHCARE STANDS OUT AS US EARNINGS POTENTIAL TO BROADEN - SAXO - CLICK HERE

UK CPI: JUST WHAT THE DOCTOR ORDERED - CLICK HERE

UK STOCKS OUTSHINE IN EUROPE AS INFLATION SLOWS - CLICK HERE

EUROPE BEFORE THE BELL: FTSE FUTURES OUTPERFORM ON SOFT INFLATION DATA - CLICK HERE

INFLATION DUO TAKES CENTRE STAGE - CLICK HERE