Inflation cools to 3.5% — biggest drop since 2020 — on falling energy prices

Inflation slowed in June by its largest monthly drop since April 2020 on falling energy prices – though the slowdown might not be enough to put interest-rate cuts back on the table. The Consumer Price Index rose 3.5% in June over the past 12 months, cooling off from 4.2% in May , the Bureau of Labor Statistics said Tuesday. On a monthly basis, the inflation rate declined 0.4% – more than expectations of a 0.2% dip. Inflation decelerated in June as the reopening of the Strait of Hormuz sent oil and gasoline prices on a decline.

Core CPI – the Fed’s preferred inflation gauge, which excludes volatile food and energy prices – ticked down to 2.6%, still well above central bankers’ 2% goal.