CNBC Daily Open: Inflation is more complex than it seems. But markets believe in simple disinflation

Months of steady decline in prices have given investors a sense that inflation is on a linear, downward trend. But inflation is far more complicated than previously thought.

Economists are expecting January’s consumer price index to rise 0.4% on a monthly basis — a jump from December’s figure of -0.1%, meaning prices actually fell. So far, the market chatter is that services inflation – the price of travel, eating out and hospitality, for example – has proved more persistent than goods inflation, largely due to an extremely tight labor market.

But logistics managers are warning that supply chains are shutting down again, which could contribute to higher prices for goods. “Late fees and warehouse fees are passed on to the consumer, which is why we are not seeing the drop in products as much as we should be,” said Paul Brashear, vice president of Dredge and Intermodal for ITS Logistics.

Nonetheless, the markets showed optimism on Monday. The Dow rose 1.11%, the S&P 500 1.14% and the Nasdaq Composite 1.48%. Ray Farris of Credit Suisse said in a Monday note that investors would be hoping for a “Goldilocks-like mix of industrial production recovery and falling inflation.” Time will tell whether the comfortable story of deflation – and the defiant optimism in the markets – holds up.