WASHINGTON, D.C. / RankWire.AI / – In June, U.S. consumer prices declined by 0.4 percent, marking the most significant monthly decrease since April 2020. The Consumer Price Index had increased by 0.5 percent in May. Yearly inflation slowed to 3.5 percent from 4.2 percent. The U.S. Bureau of Labor Statistics published the data on Tuesday. The report highlighted widespread price relief across many categories, excluding several food and household sectors.
Most of the monthly drop was driven by energy prices. The energy index fell 5.7 percent after rising 3.9 percent in May. Gasoline prices dropped 9.7 percent, and fuel oil costs decreased 9.2 percent. Electricity prices went down 1.0 percent, although utility gas service increased by 0.5 percent. Energy costs remain 15.7 percent higher than they were a year earlier.
Core inflation also slowed during June. Prices excluding food and energy did not change month-over-month after a 0.2 percent increase in May. Over the past 12 months, the core index increased by 2.6 percent, down from 2.9 percent. Shelter costs rose by 0.1 percent, their smallest monthly gain since January 2021. Rent increased 0.1 percent, while owners’ equivalent rent went up 0.2 percent.
Lower energy prices contribute to headline inflation decline
Food prices increased by 0.2 percent for the second straight month. Grocery costs rose by the same percentage, and restaurant prices also grew 0.2 percent. Eggs became 4.3 percent more expensive in June. Dairy prices increased 1.2 percent, but coffee prices dropped 2.0 percent. The overall food index is now 3.0 percent above its June 2025 level.
Price variations were seen across other major consumer categories. Motor vehicle insurance declined 2.0 percent, and communication services fell 1.5 percent. Apparel prices decreased by 0.6 percent, while used vehicle prices dipped 0.2 percent. Medical care costs edged down 0.1 percent, though hospital services experienced a slight increase. Recreation prices rose 0.5 percent, and personal care expenses went up 0.2 percent.
Federal Reserve gears up for July policy meeting
This inflation data was released two weeks before the Federal Reserve’s upcoming policy session. In June, officials maintained the federal funds rate between 3.50 percent and 3.75 percent. The next two-day meeting is scheduled to start on July 28. The Fed’s long-term inflation target remains 2 percent. Despite the slowdown from May, June’s annual CPI rate stayed above that goal.
The CPI tracks price changes across housing, transportation, food, medical care, clothing, and other consumer expenses. Its primary urban index covers over 90 percent of the U.S. population. Before seasonal adjustments, prices decreased by 0.3 percent in June. The all-items index reached 333.952, while the urban wage earner index increased 3.5 percent annually. The inflation report for July is scheduled for release on August 12.