Consumer price index inflation report June 2026:
Consumer prices fell by the most in more than six years in June as a sharp drop in energy prices provided at least temporary relief from this year’s inflation surge, the Bureau of Labor Statistics reported Tuesday.
consumer price indexA broad measure of the cost of goods and services across the U.S. economy in 2019 was generally lower than expected. Monthly CPI fell by a seasonally adjusted 0.4% and the annual inflation rate fell to 3.5%.
Economists surveyed by Dow Jones were expecting a 0.2% decline and an inflation rate of 3.8%, following May’s reading of 4.2%. The monthly decline in headline inflation was the largest since April 2020.
Core inflation, which excludes food and energy, remained flat on a monthly basis, bringing the 12-month rate to 2.6%. The consensus forecast was for increases of 0.2% and 2.9%, respectively, following a 2.9% increase in May.
The energy index fell 5.7% in June, its biggest monthly decline since April 2020, but still increased by 15.7% on an annual basis, driven by a 26.7% increase in gasoline. However, gasoline and fuel prices both fell by more than 9% in June.
Additionally, utility costs have decreased significantly, with Federal Reserve policymakers keeping a close eye on long-term inflation trends. Services, excluding energy costs, remained stable; housing increased by just 0.1% and transportation services decreased by 0.3%.
Food prices increased by 0.2%, while new vehicles remained stable and second-hand cars and trucks decreased by 0.2%. Clothing prices, which are sensitive to both energy and tariff inputs, fell 0.6%.
While stock futures remained mostly positive following the report, Treasury yields fell sharply. Investors continued to expect the Fed to raise interest rates in September, but they reduced that probability to 63 percent, down from a good 75 percent the day before, according to CME. FedWatch It is a measure of futures prices.
The Fed currently targets its key overnight borrowing rate in the range of 3.5%-3.75%.
“There was some relief from inflation at the end of June,” said Heather Long, chief economist at Navy Federal Credit Union. “This eases the pressure on the Federal Reserve and allows the central bank to wait and see what happens. The concern is that this relief will be short-lived when the war in Iran resumes. It is too uncertain to know how the inflation story will end.”
Although inflation readings offer some hope, they are unlikely to motivate Federal Reserve officials to cut interest rates anytime soon, as the central bank is generally expected to raise its benchmark interest rate in September. Fed Governor Christopher Waller said Monday it would take several months of positive readings to convince him that inflation is returning to the central bank’s 2% target.
The report came after Fed officials made harsh speeches about inflation. Following their meeting in June, policymakers issued a statement making clear that the rate-setting Federal Open Market Committee would “ensure price stability.”
While new Fed Chairman Kevin Warsh has previously expressed belief that interest rates could be lowered in the future, he has made keeping inflation under control a focal point of his message since taking office in May.
“The Fed’s number one goal is to get monetary policy right, or as close to it as possible.” Warsh said in a statement to Congress scheduled to be delivered Tuesday. “This is our clear and constant goal, the star by which we steer. And if we implement the right policy – and we will – the inflationary rise of the last five years will be a thing of the past.”
Depending on how things go in the Middle East, the decline in inflation may be temporary.
The easing of hostilities helped oil costs fall about 25% in June, but the two sides have traded attacks as President Donald Trump declared a ceasefire with Iran last week. Oil rose on Monday and rose again on Tuesday.
“The longer the conflict drags on, the more likely it is that the Fed will escalate and roll back Warsh’s promise to ‘ensure price stability’ at his first meeting as Chairman,” said Ryan Weldon, investment director at IFM Investors.
