At a time when most economic reports are troubling, in large part because of the notable dislocations caused by the harsh winter weather, the situation on the inflation front continues to be stable.

On point, after the report of a modest 0.2% increase in the Producer Price Index for January issued yesterday morning, the U.S. Labor Department followed up that benign metric with data indicating that the companion Consumer Price Index came in with an increase of 0.1% for last month. That gain matched expectations. In December, the CPI inched up by 0.2%.

Moreover, during the past 12 months, the CPI rose just 1.6%, clearly attesting to the fact that there is no inflation problem on our shores at this time. In fact, we may not have enough inflation, as the 1.6% overall 12-month rise is below the Federal Reserve's preferred target of 2.0%. Meanwhile, the threat of deflation, or actually falling prices, while not an immediate concern here, in our view, is rearing its head in France, with that nation this morning reporting a drop in consumer prices for the latest month.

Meanwhile, increases in the indexes for household energy accounted for much of this muted inflation increase, as the electricity index posted its largest rise since March of 2010--almost four years ago. The indexes for natural gas and fuel oil also rose sharply. These gains more than offset a decline in the gasoline index.

Also, the index for all items less food and energy rose by just 0.1% in January. In doing so, this so-called core inflation rate likewise remained under control. A 0.3% increase in the shelter index (i.e., rent) was the primary contributor to that moderate rise in core prices last month. Over the past year, the core CPI has risen by 1.6%, as well. As to food and energy by themselves, prices for the former were up by 1.1% over the past year, while energy costs were higher by 2.1%.

Taken as a whole, this was a benign report, as were the data on producer prices issued yesterday. If anything, inflation may be too tame. Hopefully, the serious threat of deflation across parts of Europe does not extend to our shores. At this time, as noted above, we do not expect that to happen.

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