June CPI Decelerates from May, Driven by Drop in Energy Index

U.S. inflation decelerated in June, with the Consumer Price Index (CPI) declining 0.4% after increasing 0.5% in the previous month. A 5.7% drop in the energy index drove the monthly all-items decrease, more than offsetting increases in indexes for shelter and food, the Bureau of Labor Statistics said Tuesday.

The energy index was up 15.7% on an annual basis. The monthly decline followed increases of 3.9% in May, 3.8% in April and 10.9% in March.

This decline in the all-items index was the largest monthly decrease since April 2020, when it fell 0.8%. On a year-over-year basis, the CPI climbed 3.5%, below the consensus estimate of 3.8% as well as the May annual increase of 4.2%.

Core inflation, which excludes food and energy, was unchanged from May, while the Y-O-Y increase of 2.6% came in below a consensus estimate of 2.9%. Indexes that decreased over the month include motor vehicle insurance, communication, apparel, medical care, and used cars and trucks. Conversely, the indexes for recreation, household furnishings and operations, and personal care increased in June.

The food index maintained the May monthly increase of 0.2%. The shelter index rose 0.1% in June, below the May level of 0.3%.

Both the CPI release and the Producer Price Index announcement on Wednesday occur ahead of Federal Reserve Chair Kevin Warsh’s appearances before the House and Senate. Warsh is scheduled to appear before the House Financial Services Committee at 10 a.m. EDT on Tuesday, and before the Senate Banking Committee at the same time on Wednesday.