By Alicia Wallace, CNN
(CNN) — Inflation fell last month for the first time in six years, new data showed Thursday, but the seemingly welcome reading is likely a temporary blip.
The Personal Consumption Expenditures price index – the gauge used by the Federal Reserve for its target inflation rate – dropped 0.1% from May, bringing the annual rate to 3.7% from 4.1%, Commerce Department data showed.
The inflation slowdown – which was expected – is largely due to energy prices, notably those at the fuel pump, which tumbled amid a false dawn in the Middle East war: In mid-June, the US and Iran reached a Memorandum of Understanding and ceasefire that ultimately was broken later that month.
Gasoline and energy goods prices sank 9.2% in June, the largest monthly drop since August 2022. But prices have since shot higher, and the national average is back above $4 a gallon.
When stripping out volatile energy and food prices, the “core” PCE index rose 0.1% on a monthly basis and was up 3.3% from a year ago.
The PCE price index is part of the Commerce Department’s monthly Personal Income and Outlays report, which includes comprehensive data on how Americans earn, spend and save.
In June, consumers increased their spending by 0.3% from the month before, with health care, motor vehicles, financial services and insurance driving the gain. When adjusting for inflation, spending was up 0.4%.
This story is developing and will be updated.
The-CNN-Wire™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
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