One headline I saw reported that today's CPI release showed that deflation risks were pretty low. I think it confirmed that inflation is still very much with us. The headline, year over year number will be negative for the next several months, due to rising energy prices a year ago. But it should return to positive territory before the end of the year, especially now that energy prices are rising again.
Excluding food and energy, prices were up 1.9% from a year ago. Considering how weak the economy is, and the enormous amount of "slack," or idle resources, that it has, believers in the Phillips Curve must be scratching their heads, wondering why all measures of inflation are not in negative territory. Inflation is still alive and well, and it is likely to be picking up over the course of the next 6-12 months, thanks to accommodative monetary policy. This will be very bad for Treasuries, and good for TIPS, because the bond market is still convinced that inflation is going to be very low for a very long time.
Full disclosure: I am long TIPS and TIP, as of this writing.