Inflation eased in June, according to data released by the Bureau of Labor Statistics on Tuesday.
Over the last 12 months, consumer prices increased 3.5% before seasonal adjustment, down from 4.2% in May. This was well below the 3.8% annual increase that Bloomberg economists were anticipating.
Energy prices, particularly gasoline, were the biggest contributor.
The index for energy has been steadily declining, falling 5.7% in June after rising 3.9% in May, 3.8% in April, and 10.9% in March. This was the largest one-month drop since April 2020. The gasoline index decreased 9.7% over the month. Core CPI, which excludes food and energy costs, remained flat at 0% monthly and rose 2.6% annually.
“The data offered a partial reprieve. Energy costs fell in June, and core inflation (which excludes energy and food) held steady. Both came in below market expectations,” said Moody’s Ratings chief credit officer Dr. Atsi Sheth.
“Core inflation matters for monetary policy, but headline inflation (which includes food and energy) is what shapes household budgets and purchasing power. June’s dip in energy costs may not last. Revived geopolitical tensions in the Strait of Hormuz could reverse that relief quickly.”
Here’s what the latest CPI report means for your household.
Learn more: What is the Consumer Price Index (CPI)?
Energy prices dipped, but experts say this probably won’t last
Drivers felt some relief at the pump in the last few weeks after news of the US-Iran Memorandum of Understanding pointed toward improving relations in the Middle East. The national average price for a gallon of regular gas hit over $4 last month, according to AAA, but began to settle after news of a ceasefire, with the national average now sitting at $3.85.
However, with the conflict heating up again, experts say this decrease in gas prices likely won’t stick. Americans could start to see gas prices climbing yet again.
“Inflation continues to be a thorn in the side of most American households. Geopolitical instability in the Strait of Hormuz will continue to keep energy prices volatile, and most dips in gas prices look likely to be temporary at best,” said Dr. Selma Hepp, chief economist at Cotality.
Read more: When will gas prices go down? What to know ahead of summer travel.
Transportation-related costs eased
Drivers also saw some price stability and decreases in insurance and vehicle costs.
The latest CPI also showed a 2% decrease in the motor vehicle insurance index after falling 1.7% in May. The used cars and trucks index fell 0.2% in June.
The new vehicle index was up 0.5% for the 12 months ending in June 2026, but remained unchanged month over month.
Other costs that decreased included communication (down 1.5%), apparel (down 0.6%), and medical care (down 0.1%).
Food prices climbed in June
Despite paying less for fuel and some transportation-related expenses, Americans were shelling out more for groceries. Four of the six major grocery store food group indexes increased in June.
The food index rose 0.2% in June, while food at home also increased 0.2% over the month. Other food at home increased 0.5%.
Eggs had the largest monthly increase in this category at 4.3%.
Over the month, the meats, poultry, fish, and eggs index increased 0.6%, the dairy and related products index rose 1.2%, and the cereals and bakery products index increased 0.3%.
Other categories with increases included recreation (up 0.5%), household furnishings and operations (up 0.2%), and personal care (up 0.2%).
Read more: How to save money on groceries: 13 ways to stretch your food budget
