NEW YORK (CNN/Money) - The Federal Reserve says the risk of deflation swatting the economy is remote, but for many big U.S. companies falling prices are a problem right here, right now.

Take a gander at Friday's inflation numbers, which showed that consumer prices were up 2.1 percent in July versus a year ago. Hardly seems deflationary, even when you remove the volatile food and energy sectors, which gives you a core rate of 1.5 percent.

But dig a little deeper and you'll find plenty of items that were down in price. Match them up with companies in the S&P 500, and you'll find that deflation is much more of an issue for the stock market than it is for the economy at large.

Tools, hardware, outdoor equipment and supplies, for example, are down 2.3 percent from a year ago, which has got to be hurting margins at outfits like Home Depot and Lowe's, or their suppliers. Housekeeping supply prices have dropped and so have personal care products. Not good news for a place like Procter & Gamble. Car companies have seen the cost of new vehicles decline by 1.4 percent. Phone services -- both land line and cellular -- cost less.

There are offsets, of course, but many of them aren't well represented among public companies. The cost of shelter -- which represents about 30 percent of the consumer price index -- is up 2.4 percent over a year ago. But housing companies, like the home builders, only make up a small percentage of the S&P 500's total market capitalization.

Falling prices aren't a problem for some companies, of course. The tech sector has seen deflation for years now, but it has made up for it by improving on what it sells, and selling more of it.

But many companies aren't so lucky. Their businesses have matured, their growth potential is limited, and they have low cost overseas competitors nipping at their heels.

"The continuing story is relentless global competitive pressures and widespread excess capacity," said Merrill Lynch North American economist David Rosenberg.

So, how is it that companies have been able to grow profits even as prices have fallen? Through upping their productivity -- or, to put it another way, by lowering their cost of producing goods. Productivity was up at an annualized 5.7 percent rate in the second quarter.

"Corporate America is just a productivity machine," said Rosenberg. "Non-farm businesses were able to boost their output at a 3.5 percent annual rate and cut payroll hours at an over 2 percent rate. So 40 percent of the productivity increase came from the backside of the workforce."