June CPI: Inflation Decline Likely To Be Short-Lived

The Labor Department reported that headline inflation increased 3.5% in June, down from May’s 4.2% and better than expected. The decrease below the 4% mark was due primarily to an easing in gasoline prices. I believe the reprieve is likely to be short-lived, given the restarting of hostilities between the U.S. and Iran in recent days. Stripping out the volatile food and energy categories, core inflation also came in below expected, with a rise of 2.6%. While today's data is promising, I continue to see greater odds for more hawkish Federal Reserve policy.

We're halfway through the 2026 calendar, and inflation remains front and center of the macro headlines. This isn’t exactly surprising, especially given the seesawing action in the oil markets.