US inflation eases to 3.5% in June as energy prices fall sharply

US annual consumer inflation eased to 3.5% in June, below market expectations, as a sharp decline in energy prices drove the largest monthly drop in consumer prices since April 2020, official data showed Tuesday.

The annual inflation rate slowed from 4.2% in May, according to the Bureau of Labor Statistics.

The Consumer Price Index (CPI) fell 0.4% in June from the previous month after rising 0.5% in May, marking its first monthly decline in six years and the steepest monthly decrease since April 2020.

Energy prices fell 5.7% during the month, more than offsetting increases in food and shelter costs.

Gasoline prices declined 9.7%, fuel oil fell 9.2% and electricity prices dropped 1%, while natural gas prices rose 0.5%.

Despite the monthly decline, energy prices remained 15.7% higher than a year earlier, reflecting a 26.7% annual increase in gasoline prices.

Food prices rose 0.2% from the previous month and were up 3% from a year earlier.

Core inflation, which excludes food and energy prices, was unchanged on a monthly basis and slowed to 2.6% annually from 2.9% in May.

Shelter costs rose 0.1%, the smallest monthly increase since January 2021, while prices for motor vehicle insurance, communication services, apparel, medical care and used vehicles declined.