Briefing.com details a thought EconomPic has relayed for quite some time... that inflation is not the concern:
The CPI data for May provide further affirmation that the Fed will be on hold for some time yet. Inflation pressures are simply not a problem at this juncture. The trend in both total CPI and core CPI is clearly one of disinflation, which is apt to stoke commentary about a possible turn to a deflation environment.Year over Year Change in CPI
Consumer prices declined 0.2% in May, slightly lower than the -0.1% decline in April. The Briefing.com consensus expected the index to fall 0.1%. Total CPI is up 2.0% year-over-year versus a 2.2% increase in April.
Core prices, which exclude food and energy, increased 0.1% (consensus +0.1%). The year-over-year core CPI growth rate has fallen to 0.9%, well below the Fed's target level of 2.0% - 2.5%.
Excess Capacity in the System (and the relationship to price levels)
Source: CPI / Federal Reserve