Annual inflation slowed to 3.5% in June, with core CPI unchanged month-over-month, reducing odds of a July Fed rate increase.
U.S. consumer prices fell 0.4% in June from May, the largest monthly decline since April 2020, as the annual inflation rate eased to 3.5%. Core CPI, excluding food and energy, held steady at 2.6% year-over-year, down from May’s reading.
The data contrasted with rising expectations of a Federal Reserve rate hike, as futures markets had priced a 42% chance of a July increase just a day earlier. That probability dropped to 17% following the release.
Stocks and bonds gained in morning trading, reflecting investor relief over cooling inflation pressures. The decline was driven largely by a 9.5% drop in gasoline prices.