Driven by reduced costs for gasoline and used vehicles, which offset gains in areas like shelter, food, and clothing, U.S. consumer prices unexpectedly fell in June for the first time in over four years. Despite this monthly decline, the annual inflation rate remained elevated, although core inflation reached its lowest point in over three years.
The headline figure for the month shows that U.S. consumer prices dipped by 0.1%, marking their first monthly decline since May 2020, after no change in May, according to the Labor Department’s July 11 report on the Consumer Price Index (CPI).
The CPI, a closely watched inflation gauge, measures what American consumers pay for everyday items ranging from coffee to cars. The widely reported consensus was for a 0.1% monthly increase.
Overall, food prices for the month rose by 0.2% after increasing by 0.1% in May. Within the food category, grocery prices climbed by 0.1% after being unchanged in May, while dining-out expenses rose by 0.4% for a second consecutive month.
Meanwhile, over the past year, food inflation increased by 2.2%, compared to a rate of 2.1% previously. Grocery prices rose by 1.1% over the year, while dining-out costs increased by 4.1%. These figures contrast with their previous rates of increase, which were 1% for groceries and 4% for dining out.
In other sectors, there was a 3.8% drop in pump prices in June, following a 3.6% decline in the previous month. Year-on-year, gas prices saw a 2.5% decline, compared to the previous increase of 2.2%.
The broader energy index, which includes items like gasoline, electricity, and fuel oil, fell by 2% for the second consecutive month. Energy prices year-over-year rose by 1%, contrasting with the previous increase of 3.7%.
Excluding volatile food and energy components, the rate of core consumer prices increased by 0.1% in June, compared to a 0.2% increase previously and an expected 0.2% gain.
Shelter or housing prices increased by 0.2% for the month, representing their 50th consecutive monthly rise, following four straight months of 0.4% increases. Year-over-year, they increased by 5.2%.
Recent 12-month comparisons show gains of 5.4% in May, 5.5% in April, 5.7% in both March and February, 6% in January, 6.2% in December, 6.5% in November, 6.7% in October, 7.2% in September, 7.3% in August, 7.7% in July, 7.8% in June, 8% in May, 8.1% in April, and 8.2% in March, the latter being their most significant annual increase since June 1982.
Components of shelter include prices of items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. This index accounts for about one-third of the entire CPI.
In other closely watched pricing areas:
- Clothing prices edged up by 0.1% for the month after falling by 0.3% previously. They advanced 0.8% from a year ago.
- New vehicle prices declined by 0.2% in June after falling by 0.5%. They showed a year-over-year decline of 0.9%.
- Prices for used cars and trucks fell by 1.5% during the month, following a 0.6% increase previously. Compared to prices from a year ago, they plunged by 10.1%.
- When compared to the previous year, airline fares fell by 5.1%. As for the month, they dropped by 5% following a 3.6% decline.
In terms of the headline annual rate, inflation rose by 3% for the 12 months ending in June, the smallest since June 2023, compared 3.3% previously and an expected 3.1% inflation rate.
For a broader perspective and a look further back, the inflation rate peaked at 9.1% during the 12-month period ending in June 2022. This was the fastest rate of inflation since November 1981. Additionally, until March 2023, inflation rates had remained at or above 6% for 17 consecutive months.
Meanwhile, core inflation increased by 3.3% in the year through June, the smallest since April 2021, compared to 3.4% previously and a forecast of 3.4%. This core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) to guide the central bank in setting its key interest rate.
"The latest inflation numbers put us firmly on the path for a September Fed rate cut," CNBC quoted Seema Shah, chief global strategist at Principal Asset Management. "The smallest gain in core CPI since 2021 surely gives the Fed confidence that Q1’s hot CPI readings were a bump in the road and builds momentum for multiple rate cuts this year."
As recently as September 2022, the annual core inflation rate at 6.6% was the highest since August 1982. Many economists consider the core reading as a better predictor for future inflation.
The following table of key inflation figures is for the last seven months through June, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on July 11, 2024. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.
December 2023 to June 2024 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)
| Dec 2023 | Jan 2024 | Feb 2024 | Mar 2024 | Apr 2024 | May 2024 | June 2024 | 12 Month | |
| All items | 0.2 | 0.3 | 0.4 | 0.4 | 0.3 | 0.0 | -0.1 | 3.0 |
| Food | 0.2 | 0.4 | 0.0 | 0.1 | 0.0 | 0.1 | 0.2 | 2.2 |
| Food at home | 0.1 | 0.4 | 0.0 | 0.0 | -0.2 | 0.0 | 0.1 | 1.1 |
| Food away from home | 0.3 | 0.5 | 0.1 | 0.3 | 0.3 | 0.4 | 0.4 | 4.1 |
| Energy | -0.2 | -0.9 | 2.3 | 1.1 | 1.1 | -2.0 | -2.0 | 1.0 |
| Energy commodities | -0.7 | -3.2 | 3.6 | 1.5 | 2.7 | -3.5 | -3.7 | -2.2 |
| Gasoline (all types) | -0.6 | -3.3 | 3.8 | 1.7 | 2.8 | -3.6 | -3.8 | -2.5 |
| Fuel oil | -3.3 | -4.5 | 1.1 | -1.3 | 0.9 | -0.4 | -2.4 | 0.8 |
| Energy services | 0.3 | 1.4 | 0.8 | 0.7 | -0.7 | -0.2 | -0.1 | 4.3 |
| Electricity | 0.6 | 1.2 | 0.3 | 0.9 | -0.1 | 0.0 | -0.7 | 4.4 |
| Utility (piped) gas service | -0.6 | 2.0 | 2.3 | 0.0 | -2.9 | -0.8 | 2.4 | 3.7 |
| All items less food, energy | 0.3 | 0.4 | 0.4 | 0.4 | 0.3 | 0.2 | 0.1 | 3.3 |
| Commodities less food, energy | -0.1 | -0.3 | 0.1 | -0.2 | -0.1 | 0.0 | -0.1 | -1.8 |
| New vehicles | 0.2 | 0.0 | -0.1 | -0.2 | -0.4 | -0.5 | -0.2 | -0.9 |
| Used cars and trucks | 0.6 | -3.4 | 0.5 | -1.1 | -1.4 | 0.6 | -1.5 | -10.1 |
| Apparel | 0.0 | -0.7 | 0.6 | 0.7 | 1.2 | -0.3 | 0.1 | 0.8 |
| Medical care | -0.1 | -0.6 | 0.1 | 0.2 | 0.4 | 1.3 | 0.2 | 3.1 |
| Services less energy | 0.4 | 0.7 | 0.5 | 0.5 | 0.4 | 0.2 | 0.1 | 5.1 |
| Shelter | 0.4 | 0.6 | 0.4 | 0.4 | 0.4 | 0.4 | 0.2 | 5.2 |
| Transportation | 0.1 | 1.0 | 1.4 | 1.5 | 0.9 | -0.5 | -0.5 | 9.4 |
| Medical care | 0.5 | 0.7 | -0.1 | 0.6 | 0.4 | 0.3 | 0.2 | 3.3 |
The BLS releases inflation data around the middle of the month, covering consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for July and the latest annual period will be made public on Aug. 14, 2024.
The CPI data is also used to calculate inflation rates and power this site’s U.S. Inflation Calculator, which displays the cumulative inflation and the change in the buying power of the U.S. dollar over time.
