Inflation slowed to 3.5% in June, as Americans got a break from gasoline prices
Category: News & Politics
Via: vic-eldred • 4 months ago • 6 commentsBy: Matt Grossman / The Wall Street Journal
S E E D E D C O N T E N T
Americans got a break on inflation last month, with better deals at the gas station and cooler price increases across much of the economy.
Consumer prices were up 3.5% in June from a year earlier, beating expectations and improving from the 4.2% inflation rate in May. Inflation was also lower than the 3.8% that analysts polled by The Wall Street Journal expected.
Over the month, consumer-gasoline prices dropped substantially from May. But even excluding food and energy products, prices were flat across the whole economy from the previous month, evidence that inflation trends broadly cooled.
Oil is at the forefront…
Faster price increases in recent months have made inflation the top concern once again for many economists and policymakers. After cooling to as low as 2.3% last year, inflation has picked up sharply in 2026.
The Iran war started 4½ months ago, and higher energy prices since then have been the most important driver of rising costs. In June, de-escalation helped soothe oil markets, but this month, the ceasefire collapsed and fighting resumed. The benchmark U.S. oil price is up 12% in July through Monday.
…but AI and tariffs are also fueling inflation
Setting oil aside, economists aren’t convinced that the inflation danger has passed. Measures of core inflation, which exclude volatile food and energy prices, have been stubborn too, suggesting that some of the inflation rebound springs from deeper economic trends.
In particular, the surge of investment in artificial-intelligence infrastructure could continue to push up prices even if the Iran conflict winds down. President Trump’s tariffs may also continue to filter through into higher prices.
Caution at the Fed
Markets started the year pricing in rate cuts. But in recent months, the resurgent inflation has led a growing group of Federal Reserve officials to consider whether they might need to raise interest rates instead.
On Monday, one Fed official, Governor Christopher Waller, hinted that this week’s inflation data would be pivotal for whether the central bank will consider raising rates as soon as its next meeting, which takes place later this month. Before Tuesday’s inflation data, traders in interest-rate futures markets saw roughly 2-in-5 odds of a July rate hike.
Fed Chairman Kevin Warsh, for his part, has emphasized that inflation must be tamped down, but he has declined to specify how exactly the central bank is likely to handle stubborn price increases.
Waiting for more data
The Fed’s decision will hinge more on separate inflation figures published by the Commerce Department than on Tuesday’s numbers. That index, which the Fed perceives to be more representative, stood at 4.1% in May, far above the Fed’s 2% target.
The June edition of that index won’t be published until the end of the month, after the Fed meets. But the metric draws heavily from Tuesday’s data, so Fed economists will be studying the report closely to decipher underlying trends.
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The President is threading the needle.
I'm expecting the other perspective on this to appear soon.
Okay, you tell yourself whatever you need to get through the prostate exam.
Is it reflected in the green reflection pool?
what color is the reflecting pool today - Search
Treasury yields certainly have not retreated. The bond markets are still adversely impacted by the inflationary actions of the Trump administration. Servicing the debt is eating more of the Federal budget and is projected to swell deficits. The need to raise the debt limit has been moved up to this year. As the extended Congressional holiday recesses approach, it's doubtful the debt limit can be tackled before the next Congress is seated.
The volatility of the second 100 days of war with Iran won't settle the oil markets. At some point the markets are going to realize that oil is not the critical commodity being affected by the Strait of Hormuz. President Trump's rope-a-dope approach to manipulating oil prices isn't working any longer.
Inflation has been so high, so long that 3.5% is a larger chunk of change than it was in 2022. The dollar has lost 16% of its buying power over the last 4.5 years. And the renewed attacks between the US and Iran does not portend relief any time soon.
But wait a minute...wasn't that before Trump took office? And some here are cheering getting BACK down to 3.5% inflation under Trump?
Math is hard for maga.