A sharp drop in energy prices helped cool recent inflationary pressures.
A decline in energy prices helped drive consumer inflation lower in June, providing relief for Americans, especially at the pump, the government reported on July 14.
The annual inflation rate eased sharply to a lower-than-expected 3.5 percent, from 4.2 percent.
The monthly U.S. inflation rate declined 0.4 percent last month, down from the 0.5 percent increase in May, according to new data from the Consumer Price Index released by the Bureau of Labor Statistics.
Economists had forecast a 0.1 percent drop.
This represented the largest one-month decrease since April 2020, when it fell by 0.8 percent, the bureau said.
Excluding the volatile energy and food categories, core inflation came in at 0 percent. The annual core inflation rate slowed to 2.6 percent, from 2.9 percent.
Looking ahead, the near-term inflation outlook is uncertain due to the ongoing U.S.Iran conflict. July’s 12-month inflation rate is expected to come in at 3.7 percent, according to the Cleveland Federal Reserve’s widely watched Nowcasting Model.
Inside the CPI Report
Stabilizing global energy markets helped cool down intensifying price pressures. Crude oil had declined to near pre-conflict levels, leading to a sharp fall in gasoline prices.
The energy index declined by almost 6 percent, driven by a 10 percent plunge in gasoline prices. Energy services also fell by nearly 1 percent, as electricity costs dropped by 1 percent.
However, the outlook is uncertain now that President Donald Trump has reimposed a naval blockade on Iran, driving up energy costs.
A barrel of West Texas Intermediate—the U.S. benchmark for oil prices—is trading around $80 on the New York Mercantile Exchange.
In addition to tensions, another top concern for economic observers is the president’s proposed 20 percent levy on ships traversing the Strait of Hormuz.
“Washington announced the reinstatement of the blockade on Iranian shipments while rising tensions in the Strait of Hormuz cloud the outlook for regional energy flows,” Krisada Yoonaisil, market strategist at Exness, said in a note emailed to The Epoch Times.
“This could contribute to a tighter supply outlook, higher oil prices, more inflation risks and upside pressure for yields, which could continue to support the dollar.”
The food index edged up 0.2 percent for the third consecutive month, as key protein prices—particularly for beef and veal—reversed the previous month’s decline.
By Andrew Moran
