Consumers got the first break from inflation since the height of the pandemic in 2020.
In a surprising turn of events, the cost of consumer goods and services dropped in June, the Department of Labor said Thursday.
This significant decline signals a recent slowdown in inflation, raising hopes that the Federal Reserve might slash high U.S. interest rates in the coming months.
The consumer price index (CPI) dipped by 0.1 percent in June following a flat performance in May. This marks the first decrease since May 2020, when the pandemic’s grip forced the economy into an unprecedented shutdown.
The 12-month inflation rate also eased, falling to 3.0 percent from 3.3 percent, reaching its lowest point since April 2021.
Economists had forecast CPI would rise 0.1 percent for the month and 3.1 percent over 12 months.
After the June decline, prices are up 18.8 percent since Biden took office. During the same three-and-a-half-year period of Donald Trump’s presidency, prices rose just 5.3 percent. Prior to the pandemic period, prices rose 6.2 percent under Donald Trump.
Core CPI, which excludes volatile food and energy prices, saw a modest increase of just 0.1 percent for the second consecutive month. These back-to-back readings are the slowest in more than three years, reflecting a cooling trend in underlying inflation pressures.
Year-over-year, core inflation edged down to 3.3 percent from 3.4 percent, further highlighting the ongoing deceleration in price increases.
Economists had forecast a rise of 0.2 percent for core inflation over the past month and a 3.5 increase over the year.
A steep two percent month-to-month decline in energy prices drove the headline figure down, led by a 3.8 percent decline in gasoline prices.
It wasn’t all good news. Food inflation accelerated in June, rising 0.2 percent after a 0.1 percent rise in May. The index covering grocery prices rose 0.1 percent while the dining out index rose 0.4 percent.
The shelter index increased 0.2 percent in June, including a 0.3 percent increase in rents and owners’ equivalent rent. These were the smallest increases in these indexes since August 2021.
