Inflation cooled off more than expected in June

• The consumer price index increased 3.0% in June from a year earlier.
• It was expected to cool off slightly — from a year-over-year increase of 3.3% to 3.1%.
• CPI declined 0.1% month-over-month.

The consumer price index rose 3.0% year-over-year in June, the lowest headline year-over-year rate in a year.

The expected increase noted on Investing.com was 3.1%.

Inflation had been cooling for the previous few months; the CPI rose 3.3% for the 12 months ending May, down from the 3.4% increase in April and the 3.5% increase in March.

A news release from the Bureau of Labor Statistics published on Thursday said the CPI declined 0.1% month-over-month. It was expected to increase 0.1% after no month-over-month change in May.

Core CPI, which excludes food and energy, rose 3.3% for the 12 months ending June. This follows the 3.4% year-over-year increase in May and differs slightly from the forecast of 3.4%. The latest figure is the lowest rate since April 2021.

Additionally, core CPI rose 0.1% from May to June. The forecast was 0.2%, which would have matched the previous month-over-month increase.

The slowdown in inflation comes just a couple weeks before the Fed's next meeting. While observers and markets still broadly expect the central bank to hold interest rates steady at the end of this month, a slowing labor market and cooler inflation suggest rate cuts could be coming as soon as this fall. Stock futures jumped after the report, as investors look forward to those potential rate cuts.

The food index rose 0.2% from May to June, slightly greater than the 0.1% month-over-month increase in May. It rose 2.2% from June 2023 to June 2024 after a 2.1% increase in May; this year-over-year rate has been pretty steady in the past few months, with multiple months of 2.2% increases.

The energy index declined 2.0% yet again from the preceding month. While it increased 1.0% for the 12 months ending June, that's way down from the 3.7% increase in May.

The shelter index rose 0.2% month over month in June after a series of 0.4% increases. The last time it rose by as low as 0.2% was in August 2021. "The index for gasoline fell 3.8 percent in June, after declining 3.6 percent in May, more than offsetting an increase in shelter," the BLS news release stated.

Shelter's year-over-year increase continued to slow in June, with an increase of 5.2% after May's year-over-year increase of 5.4%. The gas index declined 2.5% for the 12 months ending June.

This is a developing story. Please check back for updates.