U.S. CPI Falls in June for First Time Since 2020; Core Inflation Unchanged
AI Market Summary
June U.S. CPI fell 0.4% m/m while core inflation was flat, easing near-term pressure for additional Fed tightening. Markets reacted with higher equity index futures and lower Treasury yields as July hike expectations were reduced. However, renewed U.S.-Iran tensions have lifted oil prices again, risking a rebound in energy-driven inflation and complicating the disinflation narrative into the next Fed meeting.
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ME News reported that U.S. consumer prices fell in June for the first time in six years, while a closely watched measure of underlying inflation was essentially flat, easing some pressure on the Federal Reserve ahead of its end-of-month meeting.
Data released Tuesday by the U.S. Bureau of Labor Statistics showed the Consumer Price Index (CPI) slipped 0.4% from May and rose 3.5% year over year. The core CPI, which excludes food and energy, was unchanged on the month and increased 2.6% from a year earlier.
The report pointed to lower gasoline prices in June as a key driver, offering households some relief as the worst effects of energy-price shocks linked to the Iran conflict began to fade. Market expectations for a July rate hike cooled after the release, lifting U.S. stock index futures and pushing Treasury yields lower.
Core inflation was held down by declines in several goods categories, including clothing and used cars. Auto insurance premiums also fell sharply.
At the same time, renewed U.S.-Iran hostilities have lifted oil prices again, a development that could extend conflict-related inflation pressures. (Source: BlockBeats)
