WASHINGTON, D.C. / RankWire.AI / – In June, U.S. consumer prices declined by 0.4 percent, marking the steepest 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 announced these figures on Tuesday. The report indicated widespread price relief across many categories, excluding some food and household sectors.
Most of the monthly decline was driven by energy costs. The energy index fell 5.7 percent after a 3.9 percent increase in May. Gasoline prices dropped 9.7 percent, while fuel oil costs decreased 9.2 percent. Electricity prices went down 1.0 percent, although utility gas service rose by 0.5 percent. Energy remained 15.7 percent more expensive than a year earlier.
Core inflation also slowed in June. Prices excluding food and energy showed no monthly change after a 0.2 percent rise in May. The core index increased by 2.6 percent over 12 months, down from 2.9 percent. Shelter costs rose 0.1 percent, their smallest monthly increase since January 2021. Rent increased 0.1 percent, and owners’ equivalent rent grew 0.2 percent.
Energy decline contributes to lower headline inflation
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 increased 0.2 percent. During June, eggs became 4.3 percent more expensive. Dairy prices went up 1.2 percent, while coffee prices fell 2.0 percent. The overall food index was 3.0 percent higher than in June 2025.
Price movements varied across other major consumer categories. Motor vehicle insurance declined 2.0 percent, and communication services fell 1.5 percent. Apparel prices decreased 0.6 percent, and used vehicle prices dipped 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 costs increased 0.2 percent.
Federal Reserve gears up for July policy meeting
The inflation data was released two weeks prior to the Federal Reserve’s upcoming policy gathering. Officials maintained the federal funds rate between 3.50 percent and 3.75 percent in June. The central bank’s next two-day meeting is scheduled to start on July 28. Its long-term inflation target remains at 2 percent. Although June’s annual CPI rate stayed above that goal, there was a notable slowdown from May.
The CPI tracks price changes in sectors such as housing, transportation, food, medical care, clothing, and other consumer expenses. Its primary 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 3.5 percent annually. The July inflation report is scheduled for release on August 12.