WASHINGTON, D.C. / RankWire.AI / – Consumer prices in the United States declined by 0.4 percent in June, marking the most significant monthly decrease since April 2020. The Consumer Price Index had increased by 0.5 percent in May. Yearly inflation slowed down to 3.5 percent from 4.2 percent. The U.S. Bureau of Labor Statistics published the data on Tuesday. The report indicated widespread price relief across various sectors, excluding some food and household categories.
Energy prices contributed predominantly to the monthly drop. The energy index fell 5.7 percent after rising 3.9 percent in May. Gasoline prices decreased by 9.7 percent, and fuel oil costs declined 9.2 percent. Electricity prices went down by 1.0 percent, while utility gas service increased by 0.5 percent. Despite the decrease, energy remained 15.7 percent more costly than a year earlier.
Core inflation also eased during June. Prices excluding food and energy showed no change from the previous month after a 0.2 percent rise in May. Over the past year, the core index increased by 2.6 percent, down from 2.9 percent. Shelter costs rose by 0.1 percent, their smallest monthly increase since January 2021. Rent increased by 0.1 percent, and owners’ equivalent rent went up by 0.2 percent.
Decrease in energy prices pulls down overall inflation
Food prices increased by 0.2 percent for the second month in a row. Grocery costs rose by the same margin, and restaurant prices also grew 0.2 percent. Eggs became 4.3 percent more expensive in June. Dairy prices increased by 1.2 percent, while coffee prices dropped 2.0 percent. Overall, the food index was 3.0 percent higher than in June 2025.
Price fluctuations varied across other key consumer categories. Motor vehicle insurance decreased 2.0 percent, and communication services declined 1.5 percent. Apparel prices fell 0.6 percent, while used vehicle prices slipped 0.2 percent. Medical care costs edged down 0.1 percent, though 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 report was released two weeks prior to the Federal Reserve’s upcoming policy session. In June, officials maintained the federal funds rate within the range of 3.50 percent to 3.75 percent. The central bank’s next two-day meeting is scheduled to begin on July 28. Its long-term inflation target remains at 2 percent. Despite the slowdown from May, June’s annual CPI rate remained above that level.
The CPI tracks price changes in housing, transportation, food, medical care, clothing, and other consumer expenses. Its primary urban index covers more than 90 percent of the U.S. population. Before seasonal adjustments, prices decreased by 0.3 percent in June. The all-items index hit 333.952, while the urban wage earner index increased 3.5 percent annually. The inflation report for July is expected to be released on August 12.