US CPI clocks in at 3.5%

July 14, 2026 (MLN): Consumer prices in the US declined 0.4% on a seasonally adjusted basis in June, which marks the sharpest monthly drop in more than six years and pulling annual inflation down to 3.5% from the expected 3.8%.

The reading came in well below market expectations, driven largely by a steep pullback in energy costs that offered temporary relief after months of elevated price pressures.

Core inflation, which strips out food and energy, held flat for the month, bringing the 12-month core rate to 2.6%, compared with a consensus forecast of 0.2% monthly and 2.9% annual growth, and down from May's 2.9% level.

The energy index dropped 5.7% during the month, even as it remained up 15.7% on a yearly basis, according to the Bureau of Labor Statistics.

Both gasoline and fuel oil recorded declines exceeding 9%.

Services costs excluding energy, a metric closely tracked by Federal Reserve policymakers for gauging underlying inflation trends, were unchanged. Shelter costs rose a modest 0.1%, while transportation services fell 0.3%.

Food prices edged up 0.2% for the month. New vehicle prices were unchanged, while used cars and trucks slipped 0.2%. Apparel prices, which tend to move with both energy costs and tariff-related input costs, fell 0.6%.

Stock futures traded mostly higher following the release, while Treasury yields fell sharply.

Despite the softer inflation data, the numbers are unlikely to prompt the Fed to cut rates in the near term, with the central bank still broadly expected to raise its benchmark rate in September.

Fed Governor Christopher Waller said Monday that several more months of favourable data would be needed before he could be convinced inflation is on a sustainable path back to the Fed's 2% target, according to CNBC.

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