Cooling Inflation Eases Pressure On Fed Ahead Of Warsh Testimony
By CU Today Staff —
WASHINGTON—U.S. consumer inflation cooled more than expected in June, giving the Federal Reserve fresh evidence that price pressures are easing while reducing expectations of a near-term interest rate increase.
The Consumer Price Index rose 3.5% from a year earlier, down from 4.2% in May, while prices fell 0.4% from the previous month, the first monthly decline in more than six years, according to Reuters.
Reuters reported the sharp slowdown was driven largely by a 5.7% monthly decline in energy prices following a temporary ceasefire between the United States and Iran that briefly pushed oil prices lower. Core inflation, which excludes volatile food and energy prices, rose 2.6% year over year and was flat on a monthly basis, as lower prices for motor vehicle insurance, apparel, communications services and used vehicles offset continued increases in food costs.
"Falling gas prices led June's decline and pulled headline inflation lower year-over-year," stated America's Credit Unions Senior Economist Dawit Kebede. "Renewed hostilities could complicate the energy picture ahead, and a reversal in gasoline costs would be the most likely channel for that pressure to show up. But softening core prices point to broader-based moderation, suggesting the easing isn't confined to energy alone. That's welcome news for a Federal Reserve that has kept its focus on price stability."
Originally reported by CU Today.