US Inflation Eases in June as Energy Pressures Recede

Headline Inflation Sees First Decline in Five Months

According to the latest CPI data for June 2026, the annual inflation rate decreased to 3.5%, down from 4.2% in May. This outcome came in below analysts’ expectations of 3.8%. On a monthly basis, the CPI fell by 0.4%, compared with a 0.5% increase in May, exceeding forecasts for a 0.1% decline and representing the largest monthly drop since April 2020. The CPI index itself declined to 333.95 points from 335.12 in May.

The moderation in inflation followed a reduction in energy-related price pressures, partly reflecting the impact of the ceasefire between the US and Iran, which helped alleviate earlier energy-driven inflation. Energy costs rose 15.7% year-on-year in June, significantly below the 23.5% increase recorded in May. Gasoline prices increased 26.7% (down from 40.5% in May), while fuel oil rose 42.9% (down from 58.9%).

On a monthly basis, energy costs fell 5.7% in June after increases of 3.9% in May, 3.8% in April, and 10.9% in March. Gasoline prices dropped 9.7% over the month. The decline in energy more than offset modest monthly gains in other components, including shelter (up 0.1%) and food (up 0.2%).

Core, Food, and Shelter Inflation Also Moderate

Annual core inflation, which excludes energy and food, eased to 2.6% in June from 2.9% in May, coming in below expectations of 2.8%. On a monthly basis, core CPI was unchanged, compared with forecasts for a 0.2% increase. Services inflation slowed to 3.2% year-on-year from 3.5% previously.

Food inflation edged down to 3.0% year-on-year from 3.1%, while shelter inflation eased to 3.3% from 3.4%. Together with the retreat in energy prices, these movements contributed to the overall deceleration in headline inflation.

Historically, the US inflation rate has averaged 3.29% from 1914 to 2026, with an all-time high of 23.70% in June 1920 and a record low of -15.80% in June 1921. Looking ahead, Trading Economics global macro models and analysts expect the US inflation rate to be 3.70% by the end of the current quarter, and to trend around 2.60% in 2027 and 2.50% in 2028. The Producer Price Index (PPI) inflation rate also slowed, with PPI up 5.5% year-on-year in June versus 6.0% previously.

The next US inflation release is scheduled for August 12, 2026, at 12:30 PM GMT, covering July 2026 data. The forecast for the July annual inflation rate is 3.4%.

FAQ

What was the US annual inflation rate in June 2026?
Answer: The annual inflation rate in the US was 3.5% in June 2026, down from 4.2% in May and below forecasts of 3.8%.

How did core inflation perform in June 2026?
Answer: Annual core inflation eased to 2.6% from 2.9% in May, below expectations of 2.8%, and core CPI was flat on a monthly basis.

What role did energy prices play in the June 2026 inflation data?
Answer: Energy inflation slowed to 15.7% year-on-year from 23.5%, and energy prices fell 5.7% month-on-month, with gasoline down 9.7%, more than offsetting increases in shelter and food prices.

When is the next US inflation data release and what is the forecast?
Answer: The next release is on August 12, 2026, at 12:30 PM GMT for July 2026 data, with a forecast annual inflation rate of 3.4%.