Consumer Prices Fall 0.4 Percent in June as Annual Inflation Eases to 3.5 Percent

U.S. consumer prices posted their largest monthly drop in more than six years in June, the Bureau of Labor Statistics reported.

The Consumer Price Index for All Urban Consumers fell 0.4 percent on a seasonally adjusted basis. Over the prior 12 months, prices were up 3.5 percent. That annual rate was below the 4.2 percent pace recorded in May and below many private forecasts that centered near 3.8 percent.

Energy led the monthly decline. The energy index fell 5.7 percent in June after rising in prior months, with gasoline down 9.7 percent. Food prices rose 0.2 percent for the month. Shelter costs edged up 0.1 percent. Core inflation, which excludes food and energy, was flat for the month and 2.6 percent higher than a year earlier, down from 2.9 percent.

CNBC reported that Wall Street had expected a smaller monthly decline and a higher annual reading. The 0.4 percent monthly drop was the largest since April 2020. Analysts linked much of the energy relief to lower fuel prices after earlier geopolitical pressure on oil markets eased.

Even with the cooler June print, prices remain well above the Federal Reserve's 2 percent long-run goal on an annual basis. Households still face elevated costs for housing and other services. The next CPI release, covering July 2026, is scheduled for August 12, 2026, at 8:30 a.m. Eastern Time.

For older Americans on fixed incomes, monthly swings in gasoline can free cash in the short run, while shelter and medical costs often move more slowly. The June report is a real easing in the official index, not a return to pre-pandemic price levels.