June inflation eased as gas prices fell, but household pressure remains

The Federal Reserve’s preferred inflation gauge fell 0.1% in June from May, lowering the annual rate to 3.7% from 4.1%, Commerce Department data showed. The decline marked the first monthly drop in overall inflation in six years.

The slowdown was driven largely by energy prices, especially gasoline, after a temporary U.S.-Iran ceasefire pushed fuel costs lower. Gasoline and energy goods prices fell 9.2% in June, the largest monthly drop since August 2022, but prices later rose again and the national average moved back above $4 a gallon.

Inflation-adjusted consumer spending rose 0.4% in June, while total spending increased 0.3%. Income rose 0.2%, and the personal saving rate slipped to 2.7%, nearly a four-year low.

Core PCE inflation, which excludes food and energy, rose 0.1% for the month and was up 3.3% from a year earlier. A services measure excluding energy and housing rose 0.1% and was up 3.8% annually.

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