Energy Prices Plunge, U.S. Inflation Falls to 3.5 Percent in June

Illustration of the decline in US inflation triggered by the decline in energy prices in June. Illustration made by AI.

JAKARTA - US annual inflation slowed to 3.5 percent in June, lower than market expectations. A sharp drop in energy prices was the main factor holding back the inflation rate.

According to Anadolu Agency, which quoted data from the US Bureau of Labor Statistics released Tuesday, July 14, showed inflation fell from 4.2 percent in May.

The Consumer Price Index or CPI fell 0.4 percent compared to the previous month, after rising 0.5 percent in May. This is the first monthly decline in six years and the largest since April 2020.

Energy prices fell 5.7 percent in June. The decline was greater than the increase in food prices and housing costs.

Gasoline prices fell 9.7 percent, fuel oil fell 9.2 percent, and electricity rates fell 1 percent. On the other hand, natural gas prices rose 0.5 percent.

Even though it has declined on a monthly basis, energy prices are still 15.7 percent more expensive than a year earlier. Gasoline prices are even up 26.7 percent year-on-year.

Food prices rose 0.2 percent compared to May and increased 3 percent from the same period last year.

Core inflation, which strips out food and energy prices because they tend to be more volatile, was unchanged on a monthly basis. On an annual basis, core inflation slowed to 2.6 percent from 2.9 percent in May.

Housing costs rose 0.1 percent, the smallest monthly gain since January 2021. At the same time, motor vehicle insurance, communication services, clothing, health services, and used vehicles prices fell.