WASHINGTON, D.C. / RankWire.AI / – U.S. consumer prices fell 0.4 percent in June, the largest monthly decline since April 2020. The Consumer Price Index had risen 0.5 percent in May. Annual inflation slowed to 3.5 percent from 4.2 percent. The U.S. Bureau of Labor Statistics released the figures on Tuesday. The report showed broad price relief outside several food and household categories.
Energy costs accounted for most of the monthly decrease. The energy index dropped 5.7 percent after climbing 3.9 percent in May. Gasoline prices fell 9.7 percent, while fuel oil costs declined 9.2 percent. Electricity prices decreased 1.0 percent, though utility gas service rose 0.5 percent. Energy remained 15.7 percent more expensive than one year earlier.
Core inflation also cooled during June. Prices excluding food and energy showed no monthly increase after rising 0.2 percent in May. The core index advanced 2.6 percent over 12 months, down from 2.9 percent. Shelter costs rose 0.1 percent, their smallest monthly increase since January 2021. Rent gained 0.1 percent, while owners’ equivalent rent increased 0.2 percent.
Energy decline lowers headline inflation
Food prices rose 0.2 percent for the second consecutive month. Grocery prices increased by the same amount, while restaurant prices also gained 0.2 percent. Eggs became 4.3 percent more expensive during June. Dairy prices climbed 1.2 percent, but coffee prices dropped 2.0 percent. The overall food index stood 3.0 percent above its June 2025 level.
Price changes varied across other major consumer categories. Motor vehicle insurance fell 2.0 percent, and communication services declined 1.5 percent. Apparel prices decreased 0.6 percent, while used vehicle prices slipped 0.2 percent. Medical care costs edged down 0.1 percent, although hospital services rose slightly. Recreation prices gained 0.5 percent, and personal care costs increased 0.2 percent.
Federal Reserve prepares for July meeting
The inflation report arrived two weeks before the Federal Reserve’s next policy meeting. Officials kept the federal funds rate between 3.50 percent and 3.75 percent in June. The central bank’s next two-day meeting begins July 28. Its long-term inflation objective remains 2 percent. June’s annual CPI rate stayed above that level, despite the marked slowdown from May.
The CPI measures price changes across housing, transportation, food, medical care, clothing and other consumer expenses. Its main urban index covers more than 90 percent of the U.S. population. Before seasonal adjustment, prices fell 0.3 percent during June. The all-items index reached 333.952, while the urban wage earner index rose 3.5 percent annually. The July inflation report is scheduled for release on August 12.