Economy & Trade
US June inflation slowed as energy prices fell, but Fed caution remains
US consumer inflation slowed more than expected in June, government data released Tuesday showed, as lower energy costs outweighed increases in housing and food prices. The Labor Department said the consumer price index rose 3.5 percent from a year earlier, down from a three-year high of 4.2 percent in May. Analysts surveyed by Dow Jones Newswires and The Wall Street Journal had expected inflation of 3.8 percent.
The data came after a temporary easing of the US-Iran war lowered energy costs, but the report said renewed hostilities could add fresh price pressure. Gasoline prices in the United States fell 9.7 percent from May to June, although they remained higher than a year earlier. Energy prices had risen this year after the United States and Israel launched strikes on Iran in late February, prompting Tehran to retaliate by virtually blocking the Strait of Hormuz, a key route for global energy transit.
President Trump welcomed the inflation figures, saying prices were falling and would be brought lower. He also referred to the November midterm elections, linking the issue to voters' concerns about living costs.
Kevin Warsh, chairman of the independent US central bank, told a House Financial Services Committee hearing that it was too early to declare success on inflation. He said Federal Reserve officials had “no tolerance” for persistently high prices and would seek to end what he called a five-year inflation surge. The Fed's long-run inflation target is 2.0 percent, and price increases have been above that level for around five years.
Lawmakers also questioned Warsh about his ties to Trump, who selected him for the Fed role. Markets are watching for signs of whether the Federal Reserve may raise interest rates later this year to counter inflation, despite Trump's pressure for cuts. Asked what he would do if Trump targeted him over rate decisions, Warsh said he would continue doing his job. He said the central bank should be free of politics and that policymakers would follow data and their best judgment when setting rates.
Warsh also said the Fed is monitoring how artificial intelligence investments may affect inflation and the jobs market.
Excluding food and energy, core CPI rose 2.6 percent from a year earlier in June, also below May's level. Overall CPI fell 0.4 percent from May to June, the first monthly decline since 2020.
White House economic adviser Kevin Hassett told Fox News that the report was the best in about six years and played down expected disruption from the Middle East conflict. He said the path toward lower US gasoline prices faced only a temporary setback because of Tehran.
Nationwide chief economist Kathy Bostjancic said lower underlying inflation gives the Fed more room to decide whether and when to raise rates. But she said a sharp reversal in oil and gasoline prices would keep the chances of a rate increase in coming months high. Bernard Yaros of Oxford Economics said June's data did not show inflation spreading broadly across goods and services. He said the effects of Trump's tariffs were not clear in the data and that price pressures linked to the AI buildout were less visible than expected.
Update
US President Trump welcomed the inflation report and linked prices to the November midterm elections.
Kevin Warsh told lawmakers it was too early to celebrate and said Federal Reserve officials had no tolerance for stubbornly high prices.
Warsh said the Fed would follow data and judgment on interest rates and wanted no politics inside the central bank.
The Fed is monitoring the effects of AI investments on inflation and jobs, according to Warsh.
White House economic adviser Kevin Hassett called the report the best in about six years and downplayed expected Middle East disruption to gasoline prices.
Economists Kathy Bostjancic and Bernard Yaros gave views on what the data means for future Fed policy and inflation pressures.
US gasoline prices fell 9.7 percent month-on-month in June but remained higher than a year earlier.
The report links this year's energy price surge to US and Israeli strikes on Iran in late February and Tehran's retaliation affecting the Strait of Hormuz.
Source note: AFP news report published on 14 July 2026 at 17:48:28 UTC.
Update
Federal Reserve Chairman Kevin Warsh told lawmakers the central bank had no tolerance for stubbornly high prices and would follow the law, data and its best judgment.
Core CPI rose 2.6 percent year-on-year in June, below May's reading.
Overall CPI fell 0.4 percent from May to June, the first monthly decline since 2020.
White House economic adviser Kevin Hassett called the report the best inflation report in about six years and downplayed expected Middle East-related gasoline disruptions.
Nationwide chief economist Kathy Bostjancic said lower underlying inflation gave the Fed more room on rate decisions, but warned oil and gasoline price reversals kept rate-hike odds high.
Oxford Economics economist Bernard Yaros said June data did not show inflation broadening across goods and services, and that tariff effects were not discernible.
US gasoline prices fell 9.7 percent month-on-month in June, while food costs rose 0.2 percent.
The Personal Consumption Expenditures price index is due on July 30.
Source note: AFP news report published on 14 July 2026 at 16:05:17 UTC.
Update
Federal Reserve Chairman Kevin Warsh was appearing before the House Financial Services Committee after his first interest rate meeting at the central bank.
Warsh said the Fed’s top objective was getting monetary policy right and ending the inflation surge of the past five years.
The source reported that renewed Middle East hostilities and Trump’s order to restart a blockade of Iranian ports could make June’s inflation progress temporary.
Core CPI rose 2.6 percent year-on-year in June, while overall CPI fell 0.4 percent from May to June.
US gasoline costs fell 9.7 percent in June from May but remained higher than a year earlier.
The Personal Consumption Expenditures price index was due to be released on July 30.
Source note: AFP news report published on 14 July 2026 at 14:34:55 UTC.
Update
US gasoline costs fell 9.7 percent in June from May, though they remained higher than a year earlier.
The consumer price index fell 0.4 percent from May to June, its first month-on-month decline since 2020.
Food costs rose 0.2 percent on a monthly basis.
Excluding food and energy, CPI rose 2.6 percent from a year earlier.
Federal Reserve Chairman Kevin Warsh was due to appear before the House Financial Services Committee at 10:00 am, or 1400 GMT.
Warsh's prepared remarks said the Fed's main objective is to get monetary policy right and end the years-long inflation surge.
The Personal Consumption Expenditures price index is due to be released on July 30.
The source linked the fall in energy costs to a temporary cooling of the US-Iran war and said renewed hostilities and a blockade of Iranian ports could push oil prices up again.
Source note: AFP news report published on 14 July 2026 at 13:35:54 UTC.
Update
Analysts surveyed by Dow Jones Newswires and The Wall Street Journal had expected a 3.8 percent annual rise in consumer prices.
The source says renewed hostilities and President Donald Trump's statement that a Middle East ceasefire was over have been pushing oil prices higher again.
Federal Reserve Chairman Kevin Warsh was scheduled to appear before the House Financial Services Committee at 10:00 am eastern time, or 1400 GMT.
Warsh's prepared remarks say the Fed's main objective is to get monetary policy right and that the inflation surge of the last five years will become a thing of the past if policy is right.
Source note: AFP news report published on 14 July 2026 at 12:55:35 UTC.
Update
Consumer inflation cooled more than expected in June.
The consumer price index rose 3.5 percent year on year in June, down from 4.2 percent in May.
The Labor Department released the data on Tuesday.
Energy prices fell temporarily last month, with the report linking that to a possible US-Iran deal in the Middle East war.
Source note: AFP news report published on 14 July 2026 at 12:38:29 UTC.
Uncertainty notes
Renewed Middle East hostilities could affect future energy costs and inflation pressure.
The timing and direction of future Federal Reserve interest-rate decisions remain undecided.
The effects of tariffs and AI investment on prices were described by economists as not clear or less visible than expected in the June data.
Source
AFP news report published on .