US inflation fell for the 12th straight month in June

If the Consumer Price Index, America’s most widely-used measure of inflation, was an amusement park ride, it’d be the world’s tallest roller coaster: the Kingda Ka. Because after ascending to a historic height, it’s rapidly falling back down to Earth.

According to Labor Department figures published yesterday, US inflation stood at 3.0% over the year-long period ending in June, down from 4.0% in May and 6.0% in February. It’s the CPI’s lowest annual figure in over two years – and less than a third of the index’s recent peak exactly one year ago (9.1%).

• The core index, a separate reading that excludes often-volatile food and energy prices, rose 4.8% in June compared with a year earlier. That’s down from 5.3% in May.
• The overall CPI remains lower than the core index (a historic anomaly), largely due to a sharp annual decrease in energy costs – especially the average price of gas at the pump ($3.68 vs. $5.03 a year ago).

👀 Looking ahead… There’s still a gap between the current core inflation reading (4.8%) and the Fed’s target rate of 2%. As a result, the US central bank is widely expected to raise interest rates when its policy-making committee meets later this month.

However, many economists say yesterday’s inflation report calls into question whether the Fed will hike interest rates again after July – a move most central bank officials endorsed as recently as last month.