Monthly inflation fell in June, providing further reason for the Federal Reserve to start cutting interest rates later this year.
The Labor Department’s Consumer Price Index, a broad measure of the cost of goods and services across the U.S. economy, fell 0.1% from May to 3% for the 12-month period, the lowest in more than three years. The all-item index fell from 3.3% in May, which was flat on a monthly basis.
The Bureau of Labor Statistics reported that the so-called core CPI, which excludes volatile food and energy costs, rose 0.1% from the previous month and 3.3% from a year ago, beating expectations of 0.2% and 3.4%, respectively.
The annual increase in core rates was the smallest since April 2021.
A 3.8% drop in gasoline prices helped keep inflation in check this month, offsetting 0.2% increases in food and home prices. The lower rate of increase is another encouraging sign, as housing-related costs are one of the most persistent components of inflation, accounting for about one-third of the CPI.
Stock market futures rose after the announcement, but Treasury yields fell sharply.
Used car prices, which fell 1.5% month-on-month and 10.1% year-on-year, were one of the main drivers of 2021’s inflation surge, in addition to lower energy prices and a slight rise in home prices.
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