US inflation eased to 3.5% in June as gasoline prices fell
US consumer price inflation slowed to 3.5% in the year to June, down from prior months, with falling gasoline prices a major driver of the decline. The reading offers some relief after a stretch in which higher energy costs tied to the conflict with Iran had threatened to keep price growth elevated.
Economists warned the improvement may not hold. With fighting in and around the Strait of Hormuz still disrupting oil shipments, another spike in fuel prices could feed back into the broader index in the coming months, complicating the outlook the Federal Reserve is weighing under Chair Kevin Warsh.
The print leaves the Fed balancing a cooling headline number against the risk that an external supply shock reverses it — a reason for caution before committing to a clear path on rates.