US inflation cools more than expected in June, driven by falling gas costs

The U.S. experienced a significant cooldown in inflation during June, with the Consumer Price Index (CPI) decreasing by 0.4% from May, marking the largest monthly decline since April 2020. This brought the annual inflation rate down to 3.5%, a notable drop from May's 4.2% and below economists' projections.

This moderation was primarily driven by a substantial fall in energy prices, especially gasoline, which saw a 9.7% decrease over the month, partly due to a temporary ceasefire between the U.S. and Iran. Core inflation, excluding volatile food and energy costs, also showed signs of easing, rising 2.6% annually compared to 2.9% in May, suggesting broader underlying price pressures are moderating more than anticipated. This cooling trend may alleviate pressure on the Federal Reserve regarding future interest rate hikes.