U.S. CPI slowed more than expected in June as gasoline prices retreated
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- U.S. CPI fell 0.4% in June month-on-month after rising 0.5% in May, marking the first monthly decline since July 2023, according to the Bureau of Labor Statistics.
- U.S. CPI increased 3.5% year-on-year in June, down from 4.2% in May, surpassing economists' expectations of a 3.8% rise, driven largely by lower energy costs.
- Gasoline prices retreated from multi-year highs in June due to a brief U.S.-Iran ceasefire, contributing significantly to the monthly CPI drop, though prices began rising again after the truce collapsed.
- Strait of Hormuz tensions reignited after commercial tankers came under fire, prompting U.S.-Iran military strikes and the U.S. reinstatement of a naval blockade, disrupting global oil flows.
- Oil prices rose to a four-week high on Tuesday as the U.S. reimposed a blockade in the Strait of Hormuz, with national gasoline averaging $3.86 per gallon, up from $3.79 a week earlier.
- Core CPI, excluding food and energy, rose 2.6% year-on-year in June after a 2.9% increase in May, remaining unchanged month-on-month, indicating persistent underlying inflation pressures.
- Federal Reserve rate hike odds remain elevated despite the CPI dip, with markets pricing in a 51.9% chance of a September increase, per CME’s FedWatch tool.
Why it matters: Households get temporary relief from lower gas prices, but the swift reversal in energy costs due to Middle East conflict raises the risk of sticky inflation, making a Fed rate cut less likely before 2026 and increasing borrowing costs for consumers and businesses.
