WASHINGTON, D.C. / RankWire.AI / – In June, U.S. consumer prices decreased by 0.4 percent, leading to a slowdown in annual inflation to 3.5 percent. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) followed a 0.5 percent rise in May. This monthly drop was the largest since April 2020. The yearly inflation rate also declined from 4.2 percent in May. The report analyzed prices paid by urban consumers across major expenditure categories.
The monthly decrease was primarily driven by falling energy prices, which dropped 5.7 percent after a 3.9 percent increase in May. Gasoline prices fell 9.7 percent, electricity costs decreased by 1.0 percent, and utility gas prices rose by 0.5 percent. Fuel oil prices also declined 9.2 percent during the month. Despite these decreases, energy costs remained 15.7 percent higher than a year earlier. Gasoline was 26.7 percent above last year’s level, electricity increased 4.0 percent, and utility gas rose 3.0 percent annually.
Core inflation, which excludes food and energy, stayed unchanged in June after a 0.2 percent increase in May. The core inflation rate rose 2.6 percent from a year earlier, down from 2.9 percent in May. Shelter costs saw a minimal 0.1 percent rise, marking the smallest monthly increase since January 2021. Rent grew 0.1 percent, while owners’ equivalent rent increased by 0.2 percent. Expenses for lodging away from home dropped 2.3 percent. Services excluding energy remained flat and increased 3.2 percent on an annual basis.
Energy prices lead the drop in June
Food prices rose by 0.2 percent for a second consecutive month, remaining 3.0 percent above June 2025. Grocery and restaurant prices each increased 0.2 percent during the month. Food-at-home prices advanced 2.7 percent over the year, while food away from home increased 3.4 percent. Egg prices climbed 4.3 percent in June, dairy prices increased 1.2 percent, coffee prices fell 2.0 percent, and fruit and vegetable prices decreased 0.2 percent. Full-service meal prices rose 0.4 percent.
Several other household expenses also saw declines. Motor vehicle insurance dropped 2.0 percent, communication costs decreased 1.5 percent, and apparel costs fell 0.6 percent. Used car and truck prices declined 0.2 percent, and medical care costs decreased by 0.1 percent. Hospital service prices rose 0.1 percent despite the overall decline in medical expenses. Recreation prices increased 0.5 percent. Household furnishings and personal care each gained 0.2 percent, while the price of new vehicles remained unchanged after a drop in May.
Federal Reserve maintains current interest rate
The June data provides policymakers with an updated inflation figure before their upcoming rate decision. The Federal Reserve has kept its benchmark interest rate between 3.50 percent and 3.75 percent. In June, officials unanimously agreed to keep the rate within this range. Their next policy meeting is scheduled from July 28 through July 29. The Fed’s inflation target remains 2 percent, which is below the recent 3.5 percent CPI rate. Inflation is also lower than the 4.2 percent level recorded in May.
The CPI measures price changes paid by urban consumers for a broad array of goods and services, including food, housing, clothing, transportation, medical care, and energy. This all-urban measure covers more than 90 percent of the U.S. population. Before seasonal adjustments, the index fell 0.3 percent in June, reaching 333.952. The index for urban wage earners increased 3.5 percent annually. The upcoming CPI report for July 2026 is scheduled for release on August 12.