The consumer price index showed inflation eased last month after a spike in May driven largely by higher energy costs.
The June consumer price index showed prices fell 0.4% for the month. Over the 12-month period ending in June, consumer prices rose 3.5%, down from 4.2% in the year ending in May.
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According to the Bureau of Labor Statistics, inflation rose at its fastest annual pace since April 2023 in the year ending in May, driven largely by oil and energy prices that surged after the United States launched strikes on Iran. Despite the decline in June, inflation remains well above the Federal Reserve’s 2% target.
June’s decline in inflation was driven by a 5.7% drop in energy costs, including a 9.7% decline in gas prices. Still, energy prices were up 15.7% over the 12-month period ending in June.
Energy costs declined in June after the Trump administration brokered a ceasefire between Israel and Iran that temporarily halted fighting. In recent days, however, fighting in the region has intensified, disrupting movement through the Strait of Hormuz. The strategic shipping route has long been critical to global energy markets, and disruptions there have contributed to higher energy costs.
The consumer price index measures the cost of goods and services based on their relative importance, with food, shelter and energy carrying greater weight.
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