Inflation is starting to become at least a modest concern these days, as the Labor Department reported that the Producer Price Index rose by 0.4% in June. That gain, which was largely occasioned by a 2.1% surge in energy prices, compared unfavorably with a decline of 0.2% in May.
Looked at in another sense, though, the latest rise in wholesale prices does defuse to some extent the concerns about deflation, which had cropped up in certain instances earlier in the recovering business cycle.
Aside from energy, though, food prices dipped by 0.2% in June, the second month in a row that this component had fallen after climbing sharply in April.
As for energy, last month's increase was the first sharp acceleration in that category since January, when such prices had risen by 0.6%.
Finally, even with this pickup, the likelihood is that inflation is not seriously on the rise just yet. Please note that we will get the release of the companion Consumer Price Index data next Tuesday.