Staff Writer
July 12, 2024

Inflationary pressures cooled in June, providing a welcome respite for consumers and setting the stage for potential adjustments in interest rates.

The June Consumer Price Index (CPI) fell 0.1% month-over-month, the Bureau of Labor Statistics reported Thursday, marking the first monthly decline since May 2020. That helped moderate the annual inflation rate (year-over-year CPI) to 3%, down from 3.3% in May. Both measures beat economists’ forecasts of a 0.1% monthly increase and a 3.1% annual gain.

June’s overall inflation pullback was driven by several factors, including a sharp decline in gas prices, with the gasoline index falling 3.8% in June after a 3.6% drop in May. Prices also decreased for airfares, used cars and trucks, and communication services. Notably, monthly shelter inflation dropped to 0.2% in June after holding steady at 0.4% for four consecutive months, marking the slowest monthly increase in three years.

Core CPI, which excludes volatile food and energy components, was up 0.1% in June, below expectations for a 0.2% growth rate. Over the past year, core inflation rose 3.3%, its lowest annual rate since April of 2021.

The softer inflation data, alongside June’s balanced employment report, could bolster confidence among Federal Reserve officials that inflation is returning to the 2% target, paving the way for rate cuts as soon as September.