US Inflation Drops to 3.5% in June as Energy Prices Fall

The U.S. annual inflation rate fell to 3.5% in June, down from 4.2% in May, surpassing analyst expectations of 3.7%. Source: La Vanguardia; Diario Libre

Key drivers

• The Consumer Price Index dropped 0.4% month-over-month, the largest fall since April 2020, while analysts had predicted a 0.2% decline. Source: La Vanguardia
• Core inflation, which excludes volatile food and energy prices, decreased to 2.6% from 2.9% in May. Source: Diario Libre
• Energy prices fell 5.7% in June, driven by a ceasefire with Iran, though they remain 15.7% higher year-over-year. Source: Diario Libre; La Vanguardia
• Food prices rose 0.2%, and housing costs increased only 0.1%. Source: La Vanguardia

Remaining concerns

Although inflation is moderating, it remains above the Federal Reserve's 2% target. The recent breakdown of the Iran ceasefire could reverse energy price declines. Source: Diario Libre Fed Chair Kevin Warsh testified before Congress on the day of the release, and other upward pressures from AI-related price increases and tariff pass-through persist. Source: La Vanguardia