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Latest inflation report may show prices declined last month, led by cheaper gas
AP News • • business
Key Points:
- Inflation is expected to have cooled in June, with consumer prices forecasted to drop 0.2%, marking the first monthly decline in nearly four years, while the annual inflation rate is predicted to fall to 3.9% from 4.2% in May.
- Gas prices declined in June and early July, providing some relief, but recent Middle East tensions have caused oil prices to surge again, pushing gas prices up slightly and impacting airfares and shipping costs.
- Core inflation, which excludes food and energy, is anticipated to have risen 0.2% in June and 2.8% year-over-year, indicating a potential easing that could reduce pressure on the Federal Reserve to raise interest rates.
- Federal Reserve officials remain cautious, with some warning that persistent inflation above target may necessitate rate hikes, especially given rising costs in services and potential inflationary effects from increased spending on AI infrastructure.
- Despite the recent dip in inflation, ongoing geopolitical risks and tariff-related price increases suggest that inflationary pressures remain a concern for the economy and policymakers.
