July PPI - Aw, Look At That Cute Little Inflation

Wholesale inflation edged up by the teensiest margin in July, a mere 0.1%, according to today's Producer Price Index released by the Labor Department.  Core inflation, which excludes food and energy, actually fell by 0.3%.

This earns Chairman Bernanke a probationary gold star sticker for his timing with the recent pause in the long-standing monetary tightening campaign.  While the rate hikes in the months preceding that pause are still likely oozing their way through the economy, this fall-off in inflation may suggest the soft-landing we've been aiming for could play out nicely, with the economy touching down right on the numbers.

The second piece of the July puzzle falls into place tomorrow, with the release of the Consumer Price Index, measuring retail inflation.  If the CPI confirms today's wholesale indicator, we could see a nice extension of today's stock market rally.