Here’s the inflation breakdown for June 2026 — in one chart
Consumer prices fell in June following the decline in energy and gasoline prices, which have risen rapidly in recent months due to the Iran war. However, economists stated that inflation risks reigniting in the coming months as the hostility between the United States and Iran flares up again.
consumer price indexInflation, a barometer of inflation, rose 3.5% in June from 12 months earlier, the Bureau of Labor Statistics said Tuesday.
This is down from 4.2% in May; The annual inflation rate decreased for the first time since January, when it was at 2.4%.
“This shows that the worst is over, we are past the peak, and inflation needs to slow,” said Mark Zandi, chief economist at Moody’s.
“The biggest threat is that things will unravel and we will return to all-out war with the Bosphorus.” [of Hormuz] “Shut it down,” he said.
This could push interest rates up. The inflation rate is one of the economic indicators that the Federal Reserve uses to guide interest rate decisions. Before this latest CPI reading, policymakers at the US central bank had recently signaled that an increase in borrowing costs could be on the table to control inflation. The Fed aims for the annual inflation rate to be around 2 percent in the long term.
Economists said barring renewed tensions, inflation should slow, which would likely prompt the Fed to stay away from raising borrowing costs.
“We think inflation will continue to slow down next year,” said Tom Porcelli, chief economist at Wells Fargo. “At this point, we don’t see a compelling reason for the Fed to raise rates.”
US-Iran tensions could reignite inflation
Global oil prices It dropped significantly throughout June, falling from $90 per barrel to roughly $73 per barrel by the end of the month.
As a result, the prices of gasoline and other fuel and energy products refined from crude oil dropped significantly.
Gasoline prices fell nearly 10% in June, while fuel prices fell 9% and the broader energy category fell 6%, according to inflation data released Tuesday. But last year, each rose by double digits: 27%, 43% and 16%, respectively.
Because energy and fuel are key cost inputs for businesses, such as those used to power airplanes and transport food to grocery stores, consumers have seen prices rise to varying degrees elsewhere as well.
The price delay in June may be short-lived due to flaring tensions in the Middle East.
The US-Iran ceasefire agreement appears increasingly fragmented after the rivals clashed for a third consecutive day on Tuesday. Global oil prices rose to nearly $86 per barrel as of 9:45 a.m. ET on Tuesday.
“A significant re-escalation of the conflict could threaten to revive the underlying upside risk to inflation and increase the likelihood of a rate hike,” Goldman Sachs Research said in a note on Sunday. he wrote.
Biggest one-month decline since April 2020
The overall consumer price index fell 0.4% month-over-month in June, the BLS said, the largest one-month decline since April 2020 at the beginning of the Covid-19 pandemic.
The BLS said the energy index was the largest contributor to this decline, “more than offsetting” increases in other indexes such as housing and food.
But there were declines elsewhere as well.
The price of new vehicles remained stable throughout the month. Used car and truck prices fell 0.2% in June, bringing the annual decline to about 2%, likely due to weak consumer demand due to affordability concerns for cars, Zandi said.
Clothing and electricity prices also fell “significantly” during the month, prices for medical services also fell and housing prices “increased very slightly,” Zandi said.
But he doesn’t expect all of these trends to continue and attributed some of the price weakness to data “anomalies” that can appear from time to time in CPI reports.
In fact, certain categories in the broader CPI report may rise or fall due to various supply and demand issues.
For example, beef roast prices rose nearly 14% last year. low cattle supply for decades. Tariffs and adverse weather conditions also increased tomato prices by 20% last year, but prices have started to fall recently.
Ultimately, “assuming the war doesn’t get derailed again, there are a lot of gravitational forces at work that will push inflation toward the target,” Zandi said.
