US consumer prices fell in June as energy prices fell Stories of Ascension

Inflation has eased due to lower energy costs, but analysts warn that inflation may return after the US-Iran conflict.

U.S. consumer prices fell in June as energy prices fell, led by lower gasoline prices, after global market concerns over the Strait of Hormuz eased for a while.

Prices fell by 0.4 percent on the month, according to the Bureau of Labor Statistics Consumer Price Index (CPI) released on Tuesday.

Electricity prices led the decline, down 5.7 percent, marking the biggest monthly decline since April 2020. Fuel prices led the way, down 9.7 percent, while gasoline prices fell 9.5 percent.

The average price of a gallon of gasoline (3.78 liters) is $3.85, down from $4.07 this time last month, according to the American Automobile Association (AAA), which tracks fuel prices daily.

“President (Donald) Trump has repeatedly said that, as traffic in the Strait of Hormuz improves, oil prices – and thus inflation – will drop like a rock,” White House Deputy Press Secretary Kush Desai said in a tweet on X.

Experts said to do so it may be short-lived if the ceasefire between the US and Iran collapses after commercial tanks collided in the war last week. Since then, prices have risen from $3.79, according to AAA data.

“June CPI is a rear mirror – the decrease was real, but it shows the prices from wks ago. The new increase has oil behind, WTI (West Texas intermediate crude oil) at $ 80 today.

Al Jazeera asked the White House about the increase in oil prices following his post on X, but he did not respond.

Some sectors also saw disruptions. The price of clothing decreased by 0.6 percent for the month, the price of a used car or truck decreased by 0.2 percent, and the price of electricity decreased by 1 percent.

Food prices increased by 0.2 percent in the month. Meat prices rose 0.6 percent, and lettuce prices rose 6.5 percent. Prices of fresh fruits and vegetables, however, fell by 0.5 percent. Tomato prices fell by 10 percent.

Annual volume

Annual data tells a different story. Overall, the CPI rose 3.5 percent after a 4.2 percent increase in May, which was the largest annual increase in more than three years.

Electricity prices rose 15.7 percent compared to the previous year while fuel prices rose 27 percent. Housing costs increased by 3 percent.

Grocery prices were up 3 percent compared to this time last year. Meat prices rose 7.4 percent, and fruits and vegetables rose 5.3 percent.

The CPI report was released amid increased pressure on the Federal Reserve under its new chairman. Fed Chairman Kevin Warshwho took the reins from Jerome Powell in May, said in a prepared speech to lawmakers that the central bank “has no tolerance for persistent inflation”.

CME FedWatch, which monitors the probability of monetary policy decisions, predicts that 87.7 percent may remain at 3.5-3.75 percent with the remaining possibility predicting a rise of 25 points to 3.75-4 percent at the next policy meeting this month.

US markets were rising on the heels of consumer data. The Nasdaq rose 0.9 percent, followed by the S&P 500, which was 0.5 percent higher at the market’s open. The Dow Jones Industrial Average was up 0.1 percent in midday trading.