Inflation in the United States continued to slow in June to 3.0% year-on-year compared to 3.3% the previous month, with prices even experiencing a slight decline over one month, contrary to market expectations, according to the CPI index published on Thursday.
According to Labor Department data, prices fell 0.1% over the month, after still rising slightly in May.
Analysts’ forecasts were rather for a slight increase of 0.1% over a month, and 3.1% over a year, according to the consensus published by MarketWatch.
Excluding energy and food prices, which are more volatile by nature, so-called core inflation is up slightly over one month, at 0.1%, but this is the lowest recorded since August 2021.
This is, again, better than market expectations, which were rather on the idea of a rise of 0.2%, still according to MarketWatch.
The decline primarily concerns energy prices, which fell by 2% over the month, and particularly petrol, which fell by 3.8% after a drop of 3.6% in May.
This is the second month of decline, while in April inflation had started to rise again, and also one of the signs long awaited by the markets that inflation has resumed its march towards the 2% target aimed for by the Federal Reserve (Fed).
The CPI index is important for the purchasing power of Americans because it is the one on which pensions are indexed, but the Fed favors another index, the PCE, to conduct its monetary policy and which will be published on July 26.
“The Fed’s preferred measures are even closer to the 2% target now. These data increase confidence within the Fed that inflation is returning to 2% at a steady pace,” HFE chief economist Rubeela Farooqi said in a note.
The Fed has so far refused to cut rates, saying it lacked sufficient data to show that inflation was on track to return sustainably to its 2% target.
Inflation in the United States had spiked in the wake of the reopening of the global economy after the COVID-19 pandemic, reaching as much as 9.5% at an annual rate in June 2022.
In the process, the Fed resolutely raised its rates, bringing them to a range of between 5.25% and 5.50%, their highest level since the beginning of the century.
Inflation has since slowed sharply, falling back to around 2.6% on average in recent months, according to the PCE index, but after a rapid decline in the second half of 2023, it has tended to stabilize between 2.5% and 3% since the start of the year.
The Fed’s next meeting is scheduled for July 30-31, but the first rate cut is not expected until the next one, in mid-September, the last before the presidential election on November 5.