The U.S. Bureau of Labor Statistics reported that consumer prices fell by 0.1% in June, the first monthly decline since May 2020. This contributed to a slowing annual inflation rate, which reached 3% in June, down from 3.3% in May. The decline was largely driven by a 3.8% drop in gas prices, alongside price reductions for used cars and clothing.
Core inflation, which excludes volatile food and energy costs, rose 0.1% in June, the smallest monthly increase since August 2021. On an annual basis, core prices rose 3.3%. Despite the overall cooling, grocery prices saw a slight increase of 0.1% for the month, while housing costs continued to rise, though at a slower pace than earlier in the year.
The report arrives amid escalating tensions in the Middle East following U.S. strikes and a blockade related to the Iran conflict. Economists noted that while June's data shows cooling inflationary pressure, further disruptions to global energy exports through the Strait of Hormuz could impact future energy costs and potentially reverse recent trends in fuel prices.