We'll know more about inflation tomorrow when the CPI numbers are released, but for now, here's the latest on wholesale prices:
Core Wholesale Prices Decline, Suggesting Inflation Is Easing, by Benton Ives-Halperin, WSJ: Wholesale core inflation fell unexpectedly in July, matching the largest drop since early 2003, as prices for light trucks and cars fell substantially. Meanwhile, wholesale prices including food and energy came in below expectations, suggesting that inflation pressures may be easing.
The producer price index for finished goods rose by 0.1% on a seasonally adjusted basis last month, after increasing 0.5% in June... The producer price index for goods excluding food and energy costs fell 0.3% in July, matching the largest drop since April 2003. ... The core rate climbed 0.2% in June.
In the 12 months ending in July, overall wholesale prices climbed 4.2% on an unadjusted basis. The core rate was up 1.3%. ...
But Bloomberg notes:
Prices pressures for raw materials continue to build. Core prices for goods at the earliest stage of the production process rose at an annual rate of 43 percent over the last three months. Core prices for intermediate goods rose at an 11 percent pace since May. Profits may suffer if companies can't pass rising raw material and labor costs on to consumers.
Update: Barry Ritholtz has more. He notes, as indicated above, that "[T]he real action was in dropping Light Truck prices: Given Q2 surge in Oil and gasoline, its no surprise that light truck prices fell 3.1%. ... The drop in Car and Truck prices accounts for nearly the entire decline in the core PPI. Prices for oil and other materials continue to rise...