WASHINGTON, D.C. / RankWire.AI / – Consumer prices in the United States decreased by 0.4 percent in June, leading to a slowdown in annual inflation to 3.5 percent. The U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) followed a 0.5 percent rise in May. This monthly decline was the largest since April 2020. Additionally, the year-over-year rate dropped from 4.2 percent in May. The report analyzed price changes paid by urban consumers across key expenditure categories.
Energy prices were the primary factor behind the monthly decrease, falling 5.7 percent after a 3.9 percent increase in May. Gasoline prices declined 9.7 percent, electricity costs decreased 1.0 percent, while utility gas prices increased by 0.5 percent. Fuel oil prices also fell by 9.2 percent during the month. Despite these reductions, energy costs remained 15.7 percent higher than the same period last year. Gasoline was 26.7 percent above its year-earlier level, electricity increased by 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 higher than a year ago, down from 2.9 percent in May. Shelter costs inched up 0.1 percent, marking the smallest monthly increase since January 2021. Rent rose 0.1 percent, owners’ equivalent rent increased 0.2 percent, and lodging away from home decreased by 2.3 percent. Excluding energy services, prices for services remained flat, with an annual rise of 3.2 percent.
Energy prices lead the monthly decline
Food prices rose 0.2 percent for the second consecutive month and were 3.0 percent higher than June 2025. Grocery and restaurant prices each increased by 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 surged 4.3 percent in June, dairy prices went up by 1.2 percent, coffee prices fell 2.0 percent, and fruit and vegetable prices declined 0.2 percent. Full-service meal prices increased by 0.4 percent.
Other household expenses also saw declines. Motor vehicle insurance dropped 2.0 percent, communication costs decreased 1.5 percent, and apparel costs fell 0.6 percent. Used car and truck prices decreased 0.2 percent, while medical care costs dipped 0.1 percent. Hospital service prices went up 0.1 percent despite the overall decline in medical costs. Recreation prices rose 0.5 percent. Household furnishings and personal care each increased 0.2 percent, and new vehicle prices remained 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 next rate decision. The Federal Reserve has kept its benchmark interest rate between 3.50 percent and 3.75 percent. In June, officials unanimously agreed to maintain that range. Their upcoming policy meeting is scheduled from July 28 through July 29. The Fed’s inflation target remains at 2 percent, which is below the latest 3.5 percent annual CPI rate. Inflation is also lower than the 4.2 percent rate observed in May.
The CPI measures fluctuations in prices paid by urban consumers for a wide range of goods and services. Its scope includes food, housing, clothing, transportation, medical care, and energy. The all-urban-consumer index covers more than 90 percent of the U.S. population. Before seasonal adjustments, the index decreased 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.