WASHINGTON, D.C. / RankWire.AI / – In June, U.S. consumer prices decreased by 0.4 percent, leading to a slowdown in the yearly inflation rate 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 annual inflation rate also declined from 4.2 percent in May. The report covered prices paid by urban consumers across key spending sectors.
The decline was primarily driven by energy prices, which fell 5.7 percent after increasing 3.9 percent in May. Gasoline prices decreased by 9.7 percent, electricity costs dropped 1.0 percent, and utility gas prices rose slightly 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, electricity increased 4.0 percent, and utility gas rose 3.0 percent annually.
Core consumer prices, which exclude food and energy, remained unchanged in June after rising 0.2 percent in May. Core inflation was 2.6 percent compared to the previous year, down from 2.9 percent in May. Shelter costs increased by 0.1 percent, marking the smallest monthly gain since January 2021. Rent also rose 0.1 percent, owners’ equivalent rent increased 0.2 percent, and lodging away from home decreased by 2.3 percent. Services excluding energy were unchanged and grew 3.2 percent annually.
Energy prices drive the monthly decline
Food prices rose 0.2 percent for the second consecutive month, remaining 3.0 percent above June 2025 levels. Grocery and restaurant prices each increased by 0.2 percent during the month. Food-at-home prices went up 2.7 percent over the year, while food away from home grew 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 declined 0.2 percent. Full-service meal prices rose 0.4 percent.
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 0.1 percent. Hospital service prices increased 0.1 percent despite the overall decline in medical expenses. Recreation prices rose 0.5 percent. Household furnishings and personal care each gained 0.2 percent, while new vehicle prices remained stable after falling in May.
Federal Reserve maintains current interest rate
The June data provides policymakers with a fresh inflation update ahead of their upcoming rate decision. The Federal Reserve has kept its benchmark interest rate between 3.50 percent and 3.75 percent, with a unanimous vote in June to retain that range. The next policy meeting is scheduled from July 28 through July 29. The central bank’s inflation target remains 2 percent, which is below the latest 3.5 percent annual CPI figure. Inflation also remains lower than the 4.2 percent rate recorded in May.
The CPI measures changes in prices paid by urban consumers for a broad basket of goods and services, including food, housing, clothing, transportation, medical care, and energy. Covering more than 90 percent of the U.S. population, the all-urban-consumer index before seasonal adjustment fell 0.3 percent in June, reaching 333.952. The index for urban wage earners increased 3.5 percent annually. The next CPI report, covering July 2026, is scheduled for release on August 12.