Annual consumer price growth slowed more than expected last month, easing pressure on the Federal Reserve amid softer energy costs.
US consumer prices rose 3.5% in June from a year earlier, down from 4.2% in May and below the 3.8% forecast by economists. The decline was driven by a sharp drop in gasoline prices, though core inflation remained flat month-over-month, signaling broader cooling trends.
Inflation had accelerated in early 2026, peaking at 4.2% in May, as higher energy costs and geopolitical tensions pushed prices higher. Last year’s low of 2.3% now appears distant, with core measures still elevated, reflecting persistent underlying pressures from tariffs and wage growth.
Oil markets stabilized in June after a ceasefire eased tensions, but prices have since rebounded 12% in July as fighting resumed. While energy relief provided temporary respite, economists warn that structural factors may sustain inflationary risks.