July 12, 2023: According to the US Bureau of Labor Statistics (BLS), inflation in the United States, as measured by the CPI, decreased to 3% annually in June. This marks a decline from the 4% inflation rate recorded in May. The reading came in slightly below the market expectation of 3.1%.
The report also highlighted that core inflation, which excludes volatile food and energy prices, dropped to 4.8% from 5.3%. Every month, both the CPI and the Core CPI rose by 0.2%, falling short of analysts’ estimates.
The BLS press release pointed out that the increase in the index for shelter was the main contributor to the overall monthly increase, accounting for over 70% of the rise. The index for motor vehicle insurance also played a role in the increase, while the food index grew by 0.1% in June.
Economists at Commerzbank believe that the data eases the pressure on the US Federal Reserve for additional interest rate hikes. They noted increasing signs of easing inflationary pressure in the US, with consumer prices rising by only 0.2% compared to the previous month. The core inflation rate, an essential measure of the underlying trend, was only 0.2%, the smallest increase since February 2021.
While the Federal Reserve is still likely to raise interest rates at the end of the month, the data support the economists’ view that this will be the last rate hike.
The US Dollar experienced renewed selling pressure following the softer-than-expected inflation reading. The US Dollar Index, which tracks the performance of the USD against a basket of major currencies, was trading at its lowest level since early May, slightly above 101.00.
US inflation cooled in June, with the CPI declining to 3% yearly. The lower-than-anticipated inflation rate may impact the Federal Reserve’s rate outlook and the valuation of the US Dollar in the market.
(Note: The information and quotes provided in this rewritten news article are based on the original news sources.)