Annual inflation fell to 3.5% in June from 4.2% in May, undershooting economist projections of 3.8%.
US consumer prices rose 3.5% year-on-year in June, down from May’s 4.2% and below the 3.8% consensus. Monthly CPI fell 0.4%, reversing May’s 0.5% gain and missing the expected 0.1% dip.
The slowdown was driven by a drop in gasoline prices, which had hit multi-year highs before a brief US-Iran ceasefire. Core inflation remained elevated, keeping pressure on the Federal Reserve to consider further rate hikes this year.
Gasoline prices have since rebounded, with the national average climbing to $3.86 a gallon from $3.79 a week earlier, as tensions in the Middle East escalate.