U.S. Inflation Drops To 3% In June As Gas Prices Fall

The U.S. inflation rate decreased to 3.0% in June due to falling gas prices, which reportedly offset rising housing costs. The latest data from the Labour Department showed a decline in the consumer price index (CPI) due to falling gas prices, which helped offset rising housing costs.

The CPI’s 3.0% rise from a year ago marks a significant reduction from the 9.1% peak in mid-2022. The core CPI, which excludes volatile food and energy prices, also showed the smallest annual increase since 2021, coming in at 3.3%.

The unexpected drop in inflation has led investors to anticipate potential interest rate cuts, with the likelihood of a September cut rising to 100%, according to LSEG data. This development caused the dollar to fall 0.6% against some currencies. Treasury yields drop as well.

Federal Reserve Chair Jerome Powell acknowledged the modest progress in reducing inflation but emphasized the need for more consistent data before confidently lowering interest rates. The Fed has maintained its benchmark rate of 5.25-5.5%, the highest since 2001.

Read more: U.K. Inflation Drops to 2.3%, Lowest in Nearly Three Years.

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