The monthly inflation rate fell in June, providing further assurance that the Federal Reserve will begin cutting interest rates later this year.
this consumer price indexThe Labor Department reported on Thursday that a broad measure of the cost of goods and services in the U.S. economy fell 0.1% from May, with the 12-month cost rate at 3%, near the lowest level in more than three years. The all-items index fell from 3.3% in May, when it was unchanged from the previous month.
Excluding volatile food and energy costs, the so-called core Consumer Price Index (CPI) rose 0.1% on the month and 3.3% from a year ago, compared with forecasts of 0.2% and 3.4% respectively, according to the Bureau of Labor Statistics report.
The annual increase in core rates was the smallest since April 2021.
A 3.8% drop in gasoline prices kept inflation in check this month, offsetting a 0.2% rise in food and home prices. Housing-related costs have been one of the most stubborn components of inflation, accounting for about a third of the CPI’s weight, so the pullback in growth is another positive sign.
Stock futures rose after the news, while bond yields fell.
In addition to falling energy prices and a slight increase in housing costs, used car prices fell 1.5% this month and were down 10.1% from the same period last year. The program was one of the main drivers of the initial surge in inflation in 2021.
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