Last month I wrote that the inflation numbers were scary. (See the November 2007 update.) Looking at this month's numbers, things look less ominous, but only a little bit. Headline inflation as measured by the all-items Consumer Price Index (CPI) rose 3.4 percent at an annual rate (a.r.) for the month. We now know that prices rose 4.1 percent from the beginning to the end of 2007. As Jim Grant wryly notes in the January 11 edition of his always trenchant and unfailingly humorous biweekly Interest Rate observer, when inflation hit equivalent levels in mid-1971, this provoked a national economic emergency that was met with the imposition of the infamous Nixon wage price controls. I hope that we have learned enough about economic policy not to do that again. But then, politicians will be politicians and this is an election year.Returning to the subject of my updates, trend inflation measures are slightly lower than last month, but remain high. The traditional core CPI that excludes food and energy rose 2.9 percent (a.r.) in December, well above its average of 2.4 percent for the year. The median CPI computed by the Federal Reserve Bank of Cleveland registered a similarly elevated 3.2 percent (a.r.) reading this month, and is up 2.9 percent since December 2006. Looking at the six-month changes in the median and the 16 percent trimmed mean, my favorite measures of trend, we see that inflation is now pushing 3 percent.