U.S. consumer prices declined in June for the first time in more than six years, offering Americans some relief after months of rapidly rising energy costs.
The Consumer Price Index fell 0.4% from May, the largest monthly decline since April 2020, according to new data released Tuesday by the Bureau of Labor Statistics. Annual inflation slowed to 3.5%, down sharply from 4.2% in May.
Falling energy costs drove much of the improvement. Gasoline prices dropped 9.7% during the month, while the broader energy index declined 5.7%. Food prices continued to rise, however, increasing 0.2% both at grocery stores and restaurants.
Core inflation, which excludes volatile food and energy prices, was unchanged in June and increased 2.6% over the past year. Shelter costs rose just 0.1%, their smallest monthly increase since January 2021, while motor vehicle insurance, apparel and medical care prices declined.
The cooler report may reduce pressure on the Federal Reserve to raise interest rates at its July meeting. However, ongoing conflict in the Middle East and rising oil prices could make June’s relief temporary, leaving inflation and household affordability central concerns heading into the second half of the year.
