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U.S. wholesale, or producer, prices rose in June, albeit nominally, for the first time since February. Encouragingly, the increase was just 0.1%--a decline of 0.3% had been forecast. This mild uptick comes after successive declines of 0.1% in March, 0.2% in April, and1.0% in May, with this large latter drop occasioned by skidding oil prices.

The June result was clearly benign, and should not prevent the Federal Reserve from taking additional stimulative monetary action in the weeks and months to come should the lead bank believe that the country needs such added efforts to get the economic ball rolling again.

The Producer Price Index (PPI), it should be noted, measures how much manufacturers and wholesalers pay for finished goods. In all, higher prices for light trucks and food more than offset the falling cost of energy. In recent weeks, oil prices have started to tick up a bit on concerns about Iran. However, the deceleration in worldwide economic activity--notably in Europe--has cooled demand for energy, and acted as a counter weight to the upward pressure from Iran. Just this morning, China, the world's second largest economy, issued data showing that business activity expanded there by a comparatively modest 7.6% in the latest quarter, slowing for a sixth straight quarter.

Meanwhile, expectations had been for a decline in U.S. producer prices in June, with the consensus expectation being for a drop of 0.3% in that metric--a full 0.4% less than the nominal increase noted above. At the same time, the core rate of the PPI, that is producer prices less the volatile food and energy variables, edged up 0.2%. That was as expected.

Producer price movements can influence price changes at the retail or consumer level. For example, in May, when the PPI  fell by the outsized 1.0%, the Consumer Price Index (CPI) declined by 0.3%--that index's first setback in two years. Note that the June CPI is due out next Tuesday. Off of the latest PPI result, our sense is that the CPI will have nudged modestly higher for the latest month.

As for other parts of this report, food prices jumped last month, increasing by a strong 0.5%, following a decline of 0.6% in May. So far this year, food costs have been up for three months and down for three months. The latest drop in energy prices made it five months out of six thus far this year that such expenses have fallen.

On the whole, the report was benign and clearly not a game changer as far as the Federal Reserve is concerned. Whatever the moves taken by the lead bank when it convenes at its next FOMC meeting on July 31st will be done independent of this inflation report, in our view.

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