WASHINGTON, D.C. / RankWire.AI / – U.S. consumer prices declined by 0.4 percent in June, marking the most significant monthly decrease since April 2020. The Consumer Price Index had increased by 0.5 percent in May. The annual inflation rate slowed to 3.5 percent from 4.2 percent. The U.S. Bureau of Labor Statistics announced these figures on Tuesday. The report indicated widespread price relief across several categories, excluding some food and household sectors.
The majority of the monthly decline was driven by energy costs. The energy index dropped 5.7 percent after rising 3.9 percent in May. Gasoline prices decreased by 9.7 percent, while fuel oil costs declined 9.2 percent. Electricity prices fell 1.0 percent, although utility gas service increased by 0.5 percent. Energy remained 15.7 percent higher than in the same period last year.
Core inflation also slowed during June. Prices excluding food and energy showed no change from the previous month after a 0.2 percent rise in May. Over the past year, the core index increased by 2.6 percent, down from 2.9 percent. Shelter costs rose by 0.1 percent, the smallest monthly increase since January 2021. Rent was up 0.1 percent, while owners’ equivalent rent increased 0.2 percent.
Energy decline reduces overall inflation
Food prices increased by 0.2 percent for the second consecutive month. Grocery prices rose by the same margin, and restaurant prices also gained 0.2 percent. Eggs became 4.3 percent more expensive in June. Dairy prices climbed 1.2 percent, whereas coffee prices fell by 2.0 percent. The overall food index was 3.0 percent higher than its June 2025 level.
Price fluctuations varied among other major consumer categories. Motor vehicle insurance decreased 2.0 percent, and communication services declined 1.5 percent. Apparel prices dropped 0.6 percent, while used vehicle prices declined 0.2 percent. Medical care costs dipped 0.1 percent, although hospital services experienced slight increases. Recreation prices rose 0.5 percent, and personal care costs increased by 0.2 percent.
Federal Reserve gears up for July policy meeting
The inflation report arrived two weeks before the Federal Reserve’s upcoming policy gathering. Officials maintained the federal funds rate between 3.50 percent and 3.75 percent in June. The central bank’s next two-day meeting is scheduled to begin on July 28. Its long-term inflation goal remains at 2 percent. Despite the slowdown from May, June’s annual CPI rate stayed above that target.
The CPI tracks changes in prices across housing, transportation, food, medical care, clothing, and other consumer expenses. Its primary urban index covers over 90 percent of the U.S. population. Before seasonal adjustment, prices fell 0.3 percent in June. The all-items index reached 333.952, while the urban wage earner index increased by 3.5 percent annually. The July inflation report is scheduled for release on August 12.