The U.S. Consumer Price Index for All Urban Consumers (CPI-U) fell by 0.4% on a seasonally adjusted basis in June 2026, according to the U.S. Bureau of Labor Statistics. This represents the largest one-month decrease since April 2020, significantly reversing the 0.5% increase seen in May. Over the past 12 months, the all-items index increased 3.5% before seasonal adjustment, down from 4.2% in May, and lower than the 3.8% economists had expected. Core CPI, excluding volatile food and energy prices, remained unchanged in June, also below expectations of a 0.2% increase, and rose 2.6% annually, against an anticipated 2.8%.
The primary driver of the overall CPI decrease was a 5.7% drop in the energy index for June, which is the largest monthly decline since April 2020. This substantial fall in energy prices, particularly a 9.7% decrease in the gasoline index, more than offset increases in other categories like shelter and food. Annually, the energy index still showed a significant increase of 15.7%, though this was lower than the 23.5% rise observed in May. The easing of energy prices was attributed to a fragile ceasefire holding in the Persian Gulf after the Iran war, according to analysts.
While the overall index declined, the food index increased by 0.2% in June, consistent with the previous month. The index for all items less food and energy, or core CPI, was unchanged after a 0.2% rise in May. The shelter index showed a modest increase of 0.1%, the smallest monthly change since January 2021. Other categories that contributed to the dip in inflation include motor vehicle insurance (down 2.0%), communication (down 1.5%), apparel (down 0.6%), medical care (down 0.1%), and used cars and trucks (down 0.2%). Conversely, recreation, household furnishings and operations, and personal care indexes saw increases.
Federal Reserve Chairman Kevin Warsh indicated that central bank policymakers have "no tolerance for persistently elevated inflation" in testimony released alongside the BLS report. The White House also commented, stating the June figures supported President Donald Trump's prediction that increased traffic in Hormuz and lower oil prices would exert downward pressure on inflation. The new annual inflation rate of 3.5% is the lowest recorded since March 2026.
