U.S. June CPI shows modest slowdown as gasoline prices fall

The U.S. Consumer Price Index for June 2026 rose 3.5% year‑on‑year, a slowdown from May’s 4.2% and the first annual decline since 2020. The headline drop was driven largely by a 9.7% fall in gasoline prices, which pulled the monthly CPI down 0.4% – the first monthly dip since April 2020. Core CPI, which excludes food and energy, rose 2.6% year‑on‑year, remaining near the 2.8‑2.9% range that policymakers watch.

Economists expect the Federal Reserve to keep its benchmark rate unchanged at 3.50‑3.75%, but markets price roughly a 50‑51% chance of a rate hike at the September meeting. Fed Chair Kevin Warsh reiterated the committee’s “zero tolerance for persistently high inflation.” The inflation outlook remains vulnerable to geopolitical risks, as a fragile cease‑fire between the United States and Iran collapsed, prompting renewed strikes in the Strait of Hormuz and keeping oil prices elevated.