WASHINGTON, D.C. / RankWire.AI / – In June, U.S. consumer prices decreased by 0.4 percent, marking the most significant monthly drop since April 2020. The Consumer Price Index had increased by 0.5 percent in May. Yearly inflation 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 many sectors, excluding certain food and household categories.
A large portion of the monthly decrease was driven by energy costs. The energy index fell 5.7 percent after rising 3.9 percent in May. Gasoline prices dropped 9.7 percent, while fuel oil costs declined 9.2 percent. Electricity prices went down 1.0 percent, despite utility gas service increasing by 0.5 percent. Overall, energy remained 15.7 percent more expensive than a year earlier.
Core inflation also showed signs of easing in June. Prices excluding food and energy remained unchanged from May, after a 0.2 percent rise. Over the past 12 months, the core index increased by 2.6 percent, down from 2.9 percent. Shelter expenses rose by 0.1 percent, marking their smallest monthly increase since January 2021. Rent increased by 0.1 percent, while owners’ equivalent rent went up 0.2 percent.
Energy decline helps reduce overall inflation
Food prices increased by 0.2 percent for the second month in a row. Grocery costs rose by the same amount, and restaurant prices also gained 0.2 percent. During June, eggs became 4.3 percent more expensive. Dairy prices increased by 1.2 percent, while coffee prices fell 2.0 percent. The overall food index was 3.0 percent higher than its level in June 2025.
Price fluctuations varied across other major consumer categories. Motor vehicle insurance decreased by 2.0 percent, and communication services declined 1.5 percent. Apparel prices dropped 0.6 percent, and used vehicle prices declined 0.2 percent. Medical care costs edged down 0.1 percent, although hospital services saw a slight increase. Recreation prices rose 0.5 percent, and personal care costs went up 0.2 percent.
Federal Reserve gears up for July policy meeting
This inflation report comes two weeks before the Federal Reserve’s upcoming policy gathering. In June, officials maintained the federal funds rate between 3.50 percent and 3.75 percent. The two-day meeting is scheduled to start on July 28. The Fed’s 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 price changes across sectors such as housing, transportation, food, medical care, clothing, and other consumer expenses. Its primary urban index covers more than 90 percent of the U.S. population. Before seasonal adjustments, prices fell 0.3 percent in June. The all-items index reached 333.952, and the urban wage earner index increased 3.5 percent year-over-year. The July inflation report is set for release on August 12.