U.S. Consumer Prices Drop 0.4% in June, Largest Monthly Decline in Four Years

U.S. consumer prices fell 0.4% in June from May, the largest monthly drop in four years, the Labor Department said. Year-over-year inflation declined to 3.5% from 4.2% in May. Core consumer prices excluding food and energy were unchanged in June.

Year-over-year core inflation eased to 2.6% from 2.9% the prior month, though it stayed above the Federal Reserve’s 2% target. Oil prices jumped on July 13 after the United States renewed attacks on Iran and President Donald Trump announced a new blockade in the Strait of Hormuz. Brent crude rose 9.6% to $83.30 a barrel that day.

The Strait of Hormuz carries about one-fifth of global oil shipments. Gasoline averaged $3.87 a gallon nationwide on July 13, up 7 cents from a week earlier but down from $4.09 a month prior, AAA data showed. Prices have fallen nearly 20% from their late-May peak yet rebounded recently.

Minutes from the Federal Reserve’s June 16-17 meeting showed roughly half of policymakers favor raising interest rates by year-end. The other half prefer waiting for clearer signs that inflation is resuming its decline. Fed Governor Christopher Waller said on July 12 that core inflation had risen from 3% in December 2025 to 3.4% in May under the Fed’s preferred measure.

He noted that more than two-thirds of services had posted year-over-year increases of 3% or more. “If we get another hot reading on core inflation this week, then the (Fed) will need to consider tightening monetary policy in the near term,” Waller said.

New York Fed President John Williams said last week that monthly core inflation increases of 0.2% or less for the rest of 2026 would align with falling inflation overall.