WASHINGTON, D.C. / RankWire.AI / – In June, U.S. consumer prices declined by 0.4 percent, marking the most significant monthly decrease since April 2020. The Consumer Price Index had increased by 0.5 percent in May. Yearly inflation slowed to 3.5 percent from 4.2 percent. The U.S. Bureau of Labor Statistics released these figures on Tuesday. The report indicated widespread price relief across many categories, excluding some food and household sectors.
Most of the monthly decrease was driven by energy costs. The energy index fell 5.7 percent after a 3.9 percent rise in May. Gasoline prices dropped 9.7 percent, and fuel oil costs decreased 9.2 percent. Electricity prices went down by 1.0 percent, although utility gas service increased by 0.5 percent. Energy prices remain 15.7 percent higher than they were a year earlier.
Core inflation also eased during June. Prices excluding food and energy remained unchanged from May, which saw a 0.2 percent increase. Over the past 12 months, the core index rose by 2.6 percent, down from 2.9 percent. Shelter costs increased by 0.1 percent, marking the smallest monthly rise since January 2021. Rent increased by 0.1 percent, and owners’ equivalent rent went up by 0.2 percent.
Energy decline helps pull down headline inflation
Food prices increased by 0.2 percent for the second straight month. Grocery costs rose by the same margin, and restaurant prices also gained 0.2 percent. Eggs became 4.3 percent pricier in June. Dairy prices went up 1.2 percent, while coffee prices dropped 2.0 percent. The overall food index remains 3.0 percent above its June 2025 level.
Price changes varied across other major consumer categories. Motor vehicle insurance declined 2.0 percent, and communication services dropped 1.5 percent. Apparel prices decreased by 0.6 percent, and used vehicle prices fell 0.2 percent. Medical care costs edged down 0.1 percent, although hospital services saw a slight increase. Recreation prices rose 0.5 percent, and personal care costs increased by 0.2 percent.
Federal Reserve gears up for July policy meeting
The inflation data arrived two weeks ahead of the Federal Reserve’s upcoming policy review. In June, officials maintained the federal funds rate between 3.50 percent and 3.75 percent. The next two-day Federal Reserve meeting is scheduled to start on July 28. The central bank aims for a long-term inflation target of 2 percent. Despite the slowdown from May, June’s annual CPI rate remained above that target.
The CPI tracks price changes in housing, transportation, food, medical care, clothing, and other consumer expenses. Its primary urban index covers more than 90 percent of the U.S. population. Before seasonal adjustments, prices decreased by 0.3 percent in June. The all-items index reached 333.952, and the urban wage earner index increased by 3.5 percent annually. The July inflation report is scheduled for release on August 12.