U.S. Inflation Falls to 3.5% as Gas Prices Drop, but New Energy Risks Threaten the Relief
U.S. consumer prices declined in June for the first time since the early months of the COVID-19 pandemic, pulling the annual inflation rate down to 3.5% from 4.2% in May. Falling energy costs drove most of the improvement, with gasoline prices dropping sharply during the month. Underlying inflation also eased. Prices excluding food and energy were unchanged from May and rose 2.6% over the previous year. That suggests the earlier energy shock had not yet spread broadly across the economy. The report was better than economists expected, but it does not mean the inflation problem is over. Food and housing costs still increased, annual inflation remained above the Federal Reserve’s goal, and renewed U.S.-Iran fighting had already pushed oil prices higher by the time the June report was released.