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The Consumer Price Index was just issued within the past hour for June and, not surprisingly, it showed a notable advance, overall, gaining a sharp 0.5% last month, one-tenth of a percentage point above expectations. That increase compared with just a 0.1% rise in the headline CPI in May.

However, if we back out the volatile food and energy components, to get the so-called core rate of consumer price inflation, we find that this metric rose a more modest 0.2% for the latest month, which was right in line with expectations, and was identical with the May increase.

Overall, inflation was up just 1.8% over the past 12 months, with the core CPI rising by an even more muted 1.6% in these same 12 months, affirming once again that there is still no imbedded inflation problem in the system

As to the energy and food components, energy prices soared in June, rising an outsized 3.4% in just that one month. However, that was the lone notable increase in this category since February. At that time, energy costs, driven largely by soaring oil prices, had risen by an even more dramatic 5.7%. Conversely, energy prices fell by 2.6% and 4.3%, in March and April, respectively, and gained just 0.4% in May. On the other hand, food prices have been tame, rising just 0.2% last month, after having dipped a scant 0.1% in May. In all, food cost inflation has ranged from the aforementioned decline of 0.1% in May to a gain of 0.2% during the six months as a whole.

Taken in the aggregate, this was not a worrisome report. The typical volatility on the energy front has once more been affirmed. But over the past year, energy costs are up a cumulative 3.2%. Now, that is more than the Federal Reserve's comfort zone, to be sure, but is not an alarming rate, by any means. At the same time, food costs were up just 1.4% in the past 12 months, attesting to the absence of a serious pricing problem on that front.

Importantly, given the tame headline and core price trends over the past year, there does not appear to be an inflation problem of note at this time, and there seems little to suggest that the Fed will alter its accommodative policy initiatives sooner than it would like because of any festering inflation problem.

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