The monthly inflation rate decreased in June, giving more room for the Federal Reserve to start lowering interest rates later this year.
The consumer price index, a broader measure of goods and services across the U.S. economy, fell 0.1% from May, putting the annual rate at 3%, around the lowest level in more than three years, the Labor Department reported on Thursday. The all-items index rate decreased from 3.3% in May, when it remained stable on a monthly basis.
Excluding volatile food and energy costs, the so-called core CPI rose 0.1% monthly and 3.3% from a year ago, compared to forecasts for 0.2% and 3.4%, respectively, based on a report from the Bureau of Labor Statistics.
The annual increase for the core rate was the smallest since April 2021.
A 3.8% drop in gasoline prices dampened inflation for the month, offsetting a 0.2% rise in food and shelter prices. Housing-related costs have been one of the most difficult components of inflation and account for about a third of the weighting in the CPI. On that basis the decrease in the rate of increase is another positive sign.
Stock market futures rose after the announcement while Treasury yields fell.
In addition to lower energy prices and modest increases for housing, used vehicle prices fell 1.5% in the month and were down 10.1% from a year ago. This item is one of the main drivers in the early inflation spike in 2021.
The US dollar index which measures the US dollar currency against six major currencies was traded down 0.77% to trade at 103.945 after the CPI data decreased.
