The U.S. Consumer Price Index (CPI) eased by seven-tenths of a percentage point to 3.5% in June, following a decline in energy prices. The reading came in below analysts’ forecast of 3.7%, who had already anticipated a moderation in inflation after fuel prices surged amid the conflict with Iran. Core inflation, which excludes the volatile […]
The U.S. Consumer Price Index (CPI) eased by seven-tenths of a percentage point to 3.5% in June, following a decline in energy prices. The reading came in below analysts’ forecast of 3.7%, who had already anticipated a moderation in inflation after fuel prices surged amid the conflict with Iran.
Core inflation, which excludes the volatile energy and food prices, lowered to 2.6%, down three-tenths of a percentage point from May, according to the data released Tuesday by the the Bureau of Labor Statistics (BLS).
On a monthly basis, CPI fell a 0.4% in June following the previous rise of 0.5%, marking the largest monthly decline recorded since April of 2020, when the index dropped 0.8%.
Meanwhile, the monthly core figure, remained stable following the prior 0.2% increase.
The White House spokesperson, Kush Desai, noted that the president, Donald Trump, on X “Repeatedly stated that, as the traffic in the Strait of Ormuz normalized, oil prices – and, consequently, overall inflation – would plummet.”
“The June CPI report, that exceeded all expectations, shows that president Trump was right”, wrote Desai, without referring to the recent escalation in the war that began February 28 when the United States and Israel launched military operations against Iran. Teheran has since declared traffic in the Strait of Hormuz “closed” in retaliation.
The energy index fell 5.7% in June, coinciding with the implementation of a cease-fire and the signing of a memorandum of understanding between Washington and Teheran, that included guarantees to restore traffic along the strategic waterway.
According to the BLS, the decline in energy prices was the primary driver behind the easing in overall inflation, more than offsetting increases in other categories, including housing and food.
June’s moderation followed annul inflation readings in May (3.9%), April (3.8%), and March (10.9%), which significantly affected household budgets. Consumers are now watching over a possible rise in fuel prices following the collapse of the truce and renewed tensions over control of the sea lane.
The food index rose 0.2%, as did both indices for groceries prices and food-away-from-home prices increasing by the same amount.
On an annual basis, the energy index increased 15.7%, while the food index rose 3.0%.
Among the categories posting gains in June were recreation, household furnishings and operations, and personal care.
Categories that declined included motor vehicle insurance, communications, apparel, medical care, and the operation of cars and trucks.
Inflation, together with unemployment figures and gross domestic product (GDP), are key indicators to assessing the health of the economy and helps the Federal Reserve make monetary policy decisions.
The release of this new report coincides with the testimony of the new Fed Chairman, Kevin Wash, before congress, his first appearance before legislators since taking office.
