US CPI Falls for First Time Since 2020, Easing Pressure on Fed Rate Hikes

According to Odaily, U.S. consumer prices fell in June for the first time in six years, and a key measure of underlying inflation was largely flat, which somewhat eases the pressure on the Federal Reserve to raise interest rates. Data from the U.S. Bureau of Labor Statistics released on Tuesday showed that the Consumer Price Index (CPI) fell 0.4% from May and rose 3.5% from a year earlier. The core index, which excludes food and energy, was unchanged from May and rose 2.6% from a year earlier.

The report indicates that as the worst of the energy price shock triggered by the Iran war begins to fade, the decline in gasoline prices in June has provided some relief for consumers. With the Fed's meeting at the end of this month approaching, Fed officials may welcome this data; however, the resurgence of U.S.-Iran hostilities has led to another rise in oil prices, which could prolong the inflationary impact caused by the conflict. As investors reduce their bets on a Fed rate hike in July, U.S. stock index futures rose and Treasury yields fell. Data show that core inflation was restrained, mainly due to declines in prices for goods such as clothing and used cars. Motor vehicle insurance premiums also fell sharply.