US inflation decelerates to 3%, core CPI rises less than forecast

By Augusta Saraiva

(Bloomberg) --US inflation decelerated last month to the slowest pace in more than two years, indicating more success for a Federal Reserve that’s been bearing down on price pressures.
 

The consumer price index rose 3% last month from a year ago, according to data out Wednesday from the Bureau of Labor Statistics. From May, it advanced 0.2%.

Excluding food and energy, the CPI rose 0.2% from the prior month. From a year ago, the so-called core measure — which economists view as the better indicator of underlying inflation — advanced 4.8%, the lowest since late 2021 but still well above the Fed’s target.

 

A key reason for the slowdown in the overall measure is that the latest figure is compared to June 2022, when a rapid run-up in energy prices following Russia’s invasion of Ukraine helped drive inflation to a four-decade high. Looking ahead, upcoming year-over-year readings will be compared to relatively lower prints.

That said, the report underscores the progress of reducing price pressures since inflation peaked a year ago, aided by more than a year of interest-rate hikes and easing demand. Even so, price pressures are running well above the Fed’s target and will keep policymakers inclined to resume raising interest rates at their July 25-26 meeting.

While a hike at this month’s meeting has been signaled as likely by a number of Fed officials, they will also take into account upcoming readings on producer prices, inflation expectations and retail sales. 

Treasury yields plummeted and stock futures rose following the report.

--With assistance from Jordan Yadoo and Reade Pickert.