The Labor Department weighted in with its latest report on producer, or wholesale, prices for July earlier this morning, and that agency reported that there was no inflation last month, with the Producer Price Index coming in with an unchanged reading. A gain of 0.3% had been the consensus forecast.

This latest result compares favorably with an outsized increase of 0.8% in June and a still-appreciable gain of 0.5% in May. Further, if we back out the volatile food and energy components to get the so-called core PPI, we find that prices were up just 0.1% last month, which was half the gain generally expected. Encouragingly, for those concerned about inflation, the core PPI has been up either 0.1% or 0.2% every month since last November. That is the rate, which the Federal Reserve most often focuses on. So, if the central bank is, indeed, about ready to start tapering its popular bond-buying effort next month, it will not be because of any imminent fears about inflation.  

As to the year-to-year change in the PPI, prices, overall, rose by just 2.1%. The consensus had been for an increase of 2.4%. Also, the core PPI gained just 1.2% over the past year, which was the smallest year-over-year increase since November of 2010. Here, the expectation had been for a slightly larger 1.4% uptick. Again, there is simply no inflation problem at the wholesale level, at this time.

As to food and energy, which are excluded from the core figures, but clearly play a role in the lives of households, food costs were unchanged in July, after having gained 0.6% and 0.2%, in May and June, respectively. Meanwhile, energy costs ticked down by 0.2% last month after having posted successive large increases of 1.3% and 2.9% in May and June.

Finally, if we look further down the pipeline, we find that prices on intermediate goods were unchanged in July, after having risen by 0.5% in June, but fallen by 0.1% in May. At the same time, prices for crude goods, which are still further back in the pipeline, did increase by 1.2% in July, but that gain followed an unchanged reading in June.

Overall, this was a comforting report, but underscores why the Federal Reserve may well be more concerned about disinflation or even deflation than it is about inflation at this time.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.