The Consumer Price Index in June rose 3.5 percent, slowing down from 4.2 percent in May. This was the first drop in the annual inflation rate since January and is largely due to the truce with Iraq that allowed gas prices to drop. The tensions have escalated again in the Middle East, which doesn’t bode well for July inflation.
The CPI, on a monthly basis, declined by 0.4 percent in June, which was the largest one-month decrease since April 2020. The dop in energy prices more than offset increases in other sectors.
If there is a rebound in inflation in July, interest rates could start to move higher. Though economists think, if the situation in Middle East can be sorted out quickly, inflation should moderate and the Fed will be able to maintain the status quo.