U.S. consumer prices fell 0.4% in June as lower energy costs pulled down inflation
How left and right are reading this
- Both agree
- Inflation and core inflation both eased in June, but the improvement depended heavily on falling energy prices while other major household costs kept rising.
- They split on
- Whether the story is about households still facing rising food and shelter costs, or about cooling inflation weakening the case for further rate hikes.
The Facts
- The U.S. consumer price index fell 0.4% in June on a monthly basis after rising 0.5% in May.
- June’s monthly CPI decline was the largest since April 2020 and was the first monthly drop since May 2020.
- Annual U.S. inflation slowed to 3.5% in June from 4.2% in May, below the 3.8% expectation cited by multiple reports.
- Lower energy prices were a main driver of the June CPI decline, with the energy index down 5.7% for the month.
- Gasoline prices fell sharply in June and were a key factor in the drop in headline inflation.
- Price increases in food and shelter continued in June, but they were offset by the decline in energy costs.
- Core inflation, which excludes food and energy, slowed to 2.6% year over year in June, down from 2.9% in May.
- The inflation report affected financial markets by easing expectations of a near-term Federal Reserve rate increase and pushing Treasury yields and the dollar lower, according to multiple reports.
Analytical frames for this storyTap to explore
Context
What drove the drop in inflation in June?
Multiple reports said lower energy costs were the main reason CPI fell in June. The energy index dropped 5.7%, and gasoline prices also fell sharply, which outweighed ongoing increases in food and shelter prices HABERTURK.COM,Hill,Yahoo! Finance.
Did inflation pressures disappear across the economy?
Not entirely. While headline CPI fell, several reports said food and shelter prices still rose in June, and core inflation was lower but still positive on a yearly basis at 2.6% Hill,Financial Express,Cumhuriyet.
Why did markets react to this report?
Coverage said the softer-than-expected inflation reading reduced expectations that the Federal Reserve would raise rates in the near term. After the data, reports noted declines in Treasury yields and the U.S. dollar, while gold prices rose Haberler,Haberler,Cumhuriyet.
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