WASHINGTON, D.C. / RankWire.AI / – Consumer prices in the United States decreased by 0.4 percent in June, leading to a slowdown in the annual inflation rate to 3.5 percent. The U.S. Bureau of Labor Statistics reported that the Consumer Price Index rose by 0.5 percent in May. The June decline marked the most substantial monthly drop since April 2020. The yearly inflation rate also dropped from 4.2 percent in May. The data covers prices paid by urban consumers across major spending categories.
The decrease was primarily driven 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 increased by 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 a year earlier. Gasoline was 26.7 percent above last year, electricity increased 4.0 percent, and utility gas rose 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 was 2.6 percent higher than a year prior, down from 2.9 percent in May. Shelter costs increased by 0.1 percent, marking the smallest monthly gain 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 services stayed flat but rose 3.2 percent annually.
Energy prices drive the monthly decline
Food prices edged up by 0.2 percent for a second consecutive month, remaining 3.0 percent above June 2025 levels. Grocery and restaurant prices each increased by 0.2 percent during the month. Food-at-home prices rose 2.7 percent over the year, while food away from home went up 3.4 percent. Egg prices climbed 4.3 percent in June, dairy prices increased 1.2 percent, coffee prices fell 2.0 percent, and fruit and vegetable prices decreased 0.2 percent. Full-service meal prices went up 0.4 percent.
Other household expenses also saw declines: motor vehicle insurance dropped 2.0 percent, communication costs fell 1.5 percent, and apparel costs decreased 0.6 percent. Used car and truck prices slipped 0.2 percent, and medical care costs declined 0.1 percent. Hospital service prices increased 0.1 percent despite the overall medical care decrease. Recreation prices rose 0.5 percent. Household furnishings and personal care each increased by 0.2 percent, while new vehicle prices remained unchanged after a decline in May.
Federal Reserve maintains current interest rate
The June report provides policymakers with an updated inflation figure ahead of their upcoming rate decision. The Federal Reserve has kept its benchmark interest rate between 3.50 percent and 3.75 percent. In June, officials unanimously voted to maintain this range. The next policy meeting is scheduled from July 28 through July 29. The Fed’s inflation target remains 2 percent, which is below the latest 3.5 percent annual CPI rate. Inflation is also lower than the 4.2 percent rate recorded in May.
The Consumer Price Index measures changes in prices paid by urban consumers for a wide range of goods and services. Its scope includes food, housing, clothing, transportation, medical care, and energy. This all-urban measure accounts for more than 90 percent of the U.S. population. Before seasonal adjustments, the index fell 0.3 percent in June, reaching 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.