US CPI inflation cools to 3.5% in June as energy prices see a big drop
Washington D.C., July 14
,: US Consumer Price Index inflation cooled in June to 3.5 per cent from 4.2 per cent in May on the back of a big drop in gasoline prices, bringing some respite to consumers who were bearing the brunt of higher pump prices of gasoline.
The core inflation, which excludes energy and food prices, which are highly volatile, was flat for the month of June. The annual core inflation rate came in at 2.6%.
"The index for energy fell 5.7 per cent in June after rising 3.9 per cent in May, 3.8 per cent in April, and 10.9 per cent in March. The energy index was the largest contributor to the monthly all-items decrease, more than offsetting increases in other indexes, including those for shelter and food," the release from the Bureau of Labor Statistics said.
The drop in headline inflation, however, may not sustain as the global crude oil prices have started climbing again after falling to pre-conflict levels last month. The latest spike in crude oil prices came after renewed hostilities between Iran and the US as both sides engaged in fresh strikes, threatening prospects of a durable peace.
The global crude oil prices climbed to their highest in a month, with Brent crude oil prices at USD 86 and the US West Texas Intermediate at USD 80.
High energy prices have been the main driver of headline inflation this year after the start of the US-Iran conflict at the end of February. The interim peace agreement signed between the two sides in June led to oil prices cooling to pre-conflict levels.
The critical Strait of Hormuz is again in the spotlight with US President Donald Trump bringing back the blockade of the strait and threatening to impose of 20 per cent fee on the transit of cargo.
US Federal Reserve Governor Christopher Waller, in a speech on Monday, said that the central bank shouldn't "fight the last war" on inflation. He said that he is aware of the situation and the Fed won't repeat past mistakes, referring to the post-COVID phase when the central bank came under criticism for responding late to rising inflation. The delay cost the economy dearly as the inflation became more entrenched.
Higher inflation is also a big worry for President Trump as he faces the mid-term elections in November. Trump had warned the US oil companies to bring down the pump prices of gasoline and had ordered the Justice Department to launch a probe.
— ANI
Reader Comments
So US inflation is down because of lower energy prices, but now oil is climbing again because of fresh Iran tensions? And Trump is threatening Hormuz blockade? This is like a yo-yo. Meanwhile Indians are still paying high petrol prices at home — our taxes don't help either. Need more EV adoption and local energy security, yaar.
Core inflation at 2.6% is still above Fed's 2% target, so they won't cut rates soon. That means RBI will also be cautious with our rates. Higher US interest rates mean FIIs might pull money from emerging markets like India. Any day now our stock market will feel the heat. It's all connected globally 🌍
One thing I appreciate about this article: it clearly shows how geopolitical events drive inflation. The Iran tensions and Hormuz blockade talk are no joke. For India, which imports 80%+ of its oil, any disruption there hits us directly. Remember the 2022 fuel price spikes? Let's not repeat that. Need more strategic petroleum reserves pronto.
I moved to India from the US last year. This kind of news reminds me why I prefer living here now — our inflation management has been relatively better even though we have our own challenges. That said, the global oil price volatility still affects us all. I hope common sense prevails in the Middle East. War is never the answer.
Let's be real — even if US inflation cools, their Fed governor says they won't cut rates hastily. Smart move. But for India, we need to focus on reducing our dependence on imported oil. Make in India for solar panels,
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.