CPI unchanged in the past year for first time since 1955

There's an upside and a downside regarding the most recent U.S. retail inflation data.

The upside: The Consumer Price Index rose just 0.3% in January; further, CPI was flat on a year-over-year basis for the first time since 1955, the U.S. Labor Department announced Friday.

The downside: Non-existent inflation most likely reflects the weakest demand conditions in the U.S. in more than a generation. If those weak demand conditions persist, companies will not have sufficient pricing power needed to expand operations -- a circumstance that historically has constrained U.S. GDP growth, economists agree. Inflation decreased a revised 0.8% in December 2008.

Also, January core inflation, which excludes the often-volatile food and energy component, rose just 0.2%.