WASHINGTON, D.C. / RankWire.AI / – In June, U.S. consumer prices decreased by 0.4 percent, with the yearly inflation rate slowing to 3.5 percent. The U.S. Bureau of Labor Statistics reported that the Consumer Price Index experienced a 0.5 percent rise in May. This June decline was the largest monthly drop since April 2020. Additionally, the annual inflation rate fell from 4.2 percent in May. The report encompasses costs paid by urban consumers across key spending categories.
The decrease was primarily driven by energy prices, which fell 5.7 percent after a 3.9 percent rise in May. Gasoline prices declined 9.7 percent, electricity costs decreased by 1.0 percent, while utility gas prices edged up 0.5 percent. Fuel oil prices also dropped 9.2 percent during the month. Despite these decreases, energy costs remained 15.7 percent higher than a year earlier. Gasoline was 26.7 percent higher, electricity increased 4.0 percent, and utility gas rose 3.0 percent annually.
Core consumer prices, which exclude food and energy, remained unchanged in June after a 0.2 percent increase in May. Core inflation was 2.6 percent year-over-year, down from 2.9 percent in May. Shelter costs saw a modest 0.1 percent rise, marking the smallest monthly increase since January 2021. Rent increased 0.1 percent, while owners’ equivalent rent grew 0.2 percent. Lodging away from home decreased by 2.3 percent. Services excluding energy remained flat and rose 3.2 percent annually.
Energy prices lead the monthly decline
Food prices grew by 0.2 percent for the second consecutive month and were 3.0 percent higher than June 2025. Grocery and restaurant prices each increased 0.2 percent during the month. Food-at-home prices advanced 2.7 percent over the year, while food away from home increased 3.4 percent. Egg prices rose 4.3 percent in June, dairy prices went up 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 costs also declined. Motor vehicle insurance dropped 2.0 percent, communication prices decreased 1.5 percent, and apparel costs fell 0.6 percent. Used car and truck prices declined 0.2 percent, while medical care costs decreased 0.1 percent. Hospital service prices rose 0.1 percent despite the overall medical care decline. Recreation prices increased 0.5 percent. Household furnishings and personal care each gained 0.2 percent, and new vehicle prices were unchanged after a decrease in May.
Federal Reserve maintains current interest rate
The June data provides policymakers with an updated inflation measure 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, members unanimously agreed to keep the rate within this range. The next policy meeting is scheduled from July 28 through July 29. The Fed’s inflation target remains at 2 percent, which is below the current 3.5 percent annual CPI rate. Inflation is also lower than the 4.2 percent recorded in May.
The CPI measures price changes paid by urban consumers for a broad range of goods and services, including food, housing, clothing, transportation, medical care, and energy. This all-urban-consumer index accounts for more than 90 percent of the U.S. population. Before seasonal adjustments, the index dropped 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.