Consumer prices rose at the slowest pace since March 2021 as inflation showed further signs of cooling in June, according to the latest data from the Bureau of Labor Statistics released Wednesday morning.
The Consumer Price Index (CPI) rose 0.2% over last month and 3% over the prior year in June, a slight acceleration from May's 0.1% month-over-month increase but a slowdown compared to the month's 4% annual gain.
Both measures were slightly better than economist forecasts of a 0.3% month-over-month increase and a 3.1% annual increase, according to data from Bloomberg.
On a "core" basis, which strips out the more volatile costs of food and gas, prices in June climbed 0.2% over the prior month and 4.8% over last year. Both measures were also slightly better than economist expectations.
Core inflation remained especially sticky last month as rent prices continue to surge. The index for both rent and owners' equivalent rent rose 0.5% each. Owners' equivalent rent is the hypothetical rent a homeowner would pay.
Although the 3% jump in headline inflation represents a continued slowdown, it's still significantly above the Federal Reserve's 2% target.
That, along with last week's jobs report data that showed a resilient labor market with unemployment low and wages high, suggests the Federal Reserve will continue to raise interest rates this year.
Cleveland Fed President Loretta Mester and San Francisco Fed President Mary Daly both signaled on Monday more rate hikes were needed to tame inflation.
Investors will be closely monitoring comments from central bank officials including Minneapolis Fed President Neel Kashkari, Atlanta Fed President Raphael Bostic, Richmond Fed President Tom Barkin, and Cleveland Fed President Loretta Mester, who are all expected to speak on US economic policy throughout Wednesday.
The central bank paused its aggressive rate hiking cycle in June but implied it will likely raise rates by 0.25% two more times this year (or raise rates by 0.50% in one shot).
