WASHINGTON, D.C. / RankWire.AI / – U.S. consumer prices fell 0.4 percent in June, while annual inflation slowed to 3.5 percent. The U.S. Bureau of Labor Statistics said the Consumer Price Index followed a 0.5 percent increase in May. The June decrease marked the largest monthly drop since April 2020. The annual rate also fell from 4.2 percent in May. The report covered prices paid by urban consumers across major spending categories.
Energy prices drove the monthly decline and fell 5.7 percent after rising 3.9 percent in May. Gasoline prices dropped 9.7 percent, while electricity costs fell 1.0 percent. Utility gas prices increased 0.5 percent. Fuel oil prices also declined 9.2 percent during the month. Despite those declines, energy costs remained 15.7 percent above year-earlier levels. Gasoline stood 26.7 percent higher, while electricity increased 4.0 percent and utility gas rose 3.0 percent annually.
Core consumer prices, which exclude food and energy, held steady in June after increasing 0.2 percent in May. Core inflation rose 2.6 percent from a year earlier, down from 2.9 percent in May. Shelter costs increased 0.1 percent, the smallest monthly gain since January 2021. Rent rose 0.1 percent, while owners’ equivalent rent gained 0.2 percent. Lodging away from home fell 2.3 percent. Services excluding energy services were flat and rose 3.2 percent annually.
Energy prices lead the monthly decline
Food prices increased 0.2 percent for a second straight month and stood 3.0 percent above June 2025. Grocery prices and restaurant prices each rose 0.2 percent during the month. Food-at-home prices advanced 2.7 percent over the year. Food away from home increased 3.4 percent. Egg prices climbed 4.3 percent in June, while dairy prices rose 1.2 percent. Coffee prices fell 2.0 percent, and fruit and vegetable prices decreased 0.2 percent. Full-service meal prices rose 0.4 percent.
Several other household expenses also declined. Motor vehicle insurance fell 2.0 percent, communication prices dropped 1.5 percent and apparel costs decreased 0.6 percent. Used car and truck prices slipped 0.2 percent, while medical care costs fell 0.1 percent. Hospital service prices rose 0.1 percent despite the broader medical care decline. Recreation prices increased 0.5 percent. Household furnishings and personal care each gained 0.2 percent, while new vehicle prices held steady after falling in May.
Federal Reserve holds benchmark rate steady
The June report gives policymakers a new inflation reading before their next rate meeting. The Federal Reserve has kept its benchmark interest rate between 3.50 percent and 3.75 percent. Officials voted unanimously in June to maintain that range. Their next scheduled policy meeting runs from July 28 through July 29. The central bank’s stated inflation goal remains 2 percent, below the latest 3.5 percent annual CPI rate. Inflation also remains lower than the 4.2 percent rate recorded in May.
The CPI tracks changes in prices paid by urban consumers for a broad basket of goods and services. Its coverage includes food, housing, clothing, transportation, medical care and energy. The all-urban-consumer measure represents more than 90 percent of the U.S. population. Before seasonal adjustment, the index fell 0.3 percent in June and reached 333.952. The index for urban wage earners increased 3.5 percent annually. The next monthly CPI report, covering July 2026, is scheduled for release on August 12.