WASHINGTON, D.C. / RankWire.AI / – In June, U.S. consumer prices declined by 0.4 percent, marking the most significant monthly decrease 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 published these data on Tuesday. The report indicated widespread price relief across many categories, excluding certain food and household sectors.
The primary factor behind the monthly decline was energy costs. The energy index fell 5.7 percent after a 3.9 percent rise in May. Gasoline prices decreased by 9.7 percent, while fuel oil costs declined 9.2 percent. Electricity prices dropped 1.0 percent, though utility gas service increased by 0.5 percent. Despite the decrease, energy prices remained 15.7 percent higher than a year earlier.
Core inflation also eased in June. Prices excluding food and energy showed no change from the previous month after a 0.2 percent increase in May. Over the past 12 months, the core index rose 2.6 percent, down from 2.9 percent. Shelter costs increased by 0.1 percent, marking the smallest monthly rise since January 2021. Rent grew by 0.1 percent, while owners’ equivalent rent increased 0.2 percent.
Energy decline helps push headline inflation lower
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. Eggs became 4.3 percent more expensive during June. Dairy prices increased by 1.2 percent, while coffee prices fell 2.0 percent. Overall, the food index was 3.0 percent higher than in June 2025.
Price fluctuations varied across other major consumer categories. Motor vehicle insurance decreased 2.0 percent, and communication services declined 1.5 percent. Apparel prices fell 0.6 percent, and used vehicle prices dipped 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 expenses went up 0.2 percent.
Federal Reserve gears up for July policy meeting
The inflation data arrived two weeks ahead of the Federal Reserve’s upcoming policy session. Officials maintained the federal funds rate between 3.50 percent and 3.75 percent in June. The central bank’s next two-day gathering is scheduled to begin on July 28. Its long-term inflation target remains 2 percent. Despite the slowdown from May, June’s annual CPI rate stayed above that goal.
The CPI tracks changes in prices across housing, transportation, food, medical care, clothing, and other consumer expenses. Its main urban index covers over 90 percent of the U.S. population. Before seasonal adjustments, prices fell 0.3 percent in June. The all-items index reached 333.952, while the urban wage earner index increased by 3.5 percent annually. The July inflation report is due for release on August 12.