WASHINGTON, D.C. / RankWire.AI / – In June, U.S. consumer prices decreased by 0.4 percent, leading to a slowdown in annual inflation to 3.5 percent. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index experienced a 0.5 percent rise in May. This June decline represents the largest monthly drop since April 2020. The yearly inflation rate also dropped from 4.2 percent in May. The report covers costs paid by urban households across key spending sectors.
The monthly decrease was driven primarily by energy prices, which fell 5.7 percent after a 3.9 percent increase in May. Gasoline prices dropped 9.7 percent, electricity costs declined 1.0 percent, and utility gas prices rose 0.5 percent. Fuel oil prices also decreased by 9.2 percent during the month. Despite these declines, energy costs remained 15.7 percent higher than they were a year earlier. Gasoline prices were 26.7 percent above last year, electricity up 4.0 percent, and utility gas increased 3.0 percent on an annual basis.
Core consumer prices, which exclude food and energy, remained unchanged in June after a 0.2 percent rise in May. Core inflation increased 2.6 percent compared to the previous year, down from 2.9 percent in May. Shelter costs edged up 0.1 percent, marking the smallest monthly increase since January 2021. Rent rose 0.1 percent, while owners’ equivalent rent increased 0.2 percent. Lodging away from home fell 2.3 percent. Services excluding energy remained flat, with a 3.2 percent rise over the past year.
Energy prices lead the monthly decline
Food prices increased by 0.2 percent for the second consecutive month, and stood 3.0 percent above June 2025. Grocery and restaurant prices each rose 0.2 percent during the month. Food-at-home prices went up 2.7 percent over the year, while food away from home increased 3.4 percent. Egg prices climbed 4.3 percent in June, dairy prices rose 1.2 percent, coffee prices fell 2.0 percent, and fruit and vegetable prices decreased 0.2 percent. Full-service meal prices increased 0.4 percent.
Other household expenses also saw declines. Motor vehicle insurance decreased 2.0 percent, communication prices dropped 1.5 percent, and apparel costs fell 0.6 percent. Used car and truck prices decreased 0.2 percent, and medical care costs declined 0.1 percent. Hospital service prices rose 0.1 percent despite the overall decrease in medical expenses. Recreation prices increased by 0.5 percent. Household furnishings and personal care both gained 0.2 percent, while prices for new vehicles remained steady after a decline in May.
Federal Reserve maintains current interest rate
The June report provides policymakers with fresh inflation data ahead of their upcoming rate decision. The Federal Reserve has kept its benchmark interest rate within the range of 3.50 percent to 3.75 percent. In June, officials unanimously agreed to maintain this range. Their next policy meeting is scheduled from July 28 through July 29. The central bank’s inflation target remains at 2 percent, which is below the current 3.5 percent annual CPI rate. Inflation also remains lower than the 4.2 percent recorded in May.
The CPI measures changes in prices paid by urban consumers for a wide array of goods and services, including food, housing, clothing, transportation, medical care, and energy. The index for urban consumers covers more than 90 percent of the U.S. population. Before seasonal adjustment, the index declined 0.3 percent in June to 333.952. The index for urban wage earners increased 3.5 percent annually. The next CPI report, covering July 2026, is scheduled for release on August 12.