Inflation cooled to an annual rate of 3.5% in June as the brief US-Iran ceasefire, which has since ended, brought energy prices down, according to new data from the Bureau of Labor Statistics.
The consumer price index (CPI), which measures a basket of goods and services, has been elevated since the start of the war, largely because of higher energy prices
After mostly staying under 3% since mid-2024, CPI reached a three-year high of 4.2% in May – up from 2.4% in February. Month-over-month, CPI fell 0.8% in June, the largest one-month decrease since April 2020. Declines in the energy index were the largest contributor to the overall decline in CPI, offsetting increases in other indexes such as food, utilities and shelter.
Gasoline prices dropped 9.7% from May to June and fuel oil, which includes diesel and kerosene, was down 9.2% for the month. Apparel also ticked down 0.6%. Stripping out volatile energy and food prices, core inflation – which the Federal Reserve watches closely to measure underlying inflation – decreased slightly to 2.6% on a yearly basis and remained flat from the previous month.