Inflation cools to 3.5% in June in relief brought by brief US-Iran deal | Inflation
According to new data from the Bureau of Labor Statistics, inflation fell to 3.5 percent annually in June as the short-term ceasefire between the United States and Iran reduced energy prices.
The consumer price index (CPI), which measures a range of goods and services, has risen since the start of the war, largely due to higher energy prices. The CPI, which has remained mostly below 3% since mid-2024, reached a three-year high of 4.2% in May, from 2.4% in February. Excluding fluctuating energy and food prices, core inflation fell slightly to 2.6%.
Although the US-Iran peace agreement has provided some relief in energy prices, recent strikes between the two countries have caused oil prices to rise again. Donald Trump said on Monday that the Strait of Hormuz, through which one-fifth of the world’s oil and natural gas passes, will remain open “with or without Iran” and claimed that the United States would restart the blockade of Iranian ports.
By contrast, Brent crude, oil’s global benchmark, hit $80 on Monday, just after hitting its last low of $67 in early July. Prices at the pump have also increased: The national average price of a regular gallon of gas rose to $3.87 per gallon last week; that was 70 cents more per gallon than a year ago.
High energy prices are reflected in higher prices in other sectors, including travel. Delta said in its quarterly earnings call last week that it expects higher airfares to last, passing 60% of the extra fuel costs on to consumers.
Although Trump said last month he wasn’t worried about that high number, polls show that many Americans I don’t approve of his handling of the war.. A recent Harris-Guardian poll found that a majority of Americans believe the economy is worse than it was in February, and 95% believe the country is in a financial crisis.
Despite rising inflation over the past few months, the American job market has remained relatively stable. The average number of jobs added to the economy from April to June was 111,000; This indicates a relatively strong labor market amid economic uncertainty.
The US Federal Reserve will evaluate both rising prices and the labor market at its board of directors meeting planned to be held on July 28 and 29. Last month the central bank voted unanimously to maintain rates and emphasized its goal of ensuring price stability. Inflation remains well above the 2% target announced by the central bank.
