US June inflation eases, easing pressure on the Federal Reserve

U.S. consumer prices fell 0.4% month‑on‑month in June, the biggest decline since April 2020, taking the annual CPI rate to 3.5% from 4.2% in May. Core inflation, which excludes food and energy, was unchanged at 2.6% year‑over‑year. The Producer Price Index also dropped 0.3% month‑on‑month, the first contraction since August 2025, leaving annual wholesale inflation at 5.5%.

Energy prices drove most of the slowdown: gasoline fell 12% in June and overall energy costs slipped 6.4% as a preliminary U.S.–Iran truce eased oil market tension. Analysts warned the relief could be short‑lived if hostilities resume.

The Fed’s Beige Book, released July 15, reported modest growth in 11 of 12 districts and noted that price growth was the same or slower everywhere, with many districts citing lower fuel costs. Fed Chair Kevin Warsh reiterated the central bank’s “no tolerance for persistently elevated inflation” but said the June data reduced immediate pressure for another rate hike. Markets have already repriced expectations, with Treasury yields falling and the dollar weakening against several major currencies. Continued Middle‑East tension remains the chief risk to the inflation outlook.