US JUNE INFLATION SLOWED ON LOWER ENERGY PRICES

US inflation slowed in June as lower energy prices helped ease pressure on consumers, according to data released by the Bureau of Labor Statistics on Friday.

The Consumer Price Index (CPI) rose by 0.1% month-on-month and 3.0% year-on-year, down from 3.3% in May. The core CPI, which excludes food and energy, increased by 0.2% month-on-month and 3.2% year-on-year, slightly below expectations.

Economists attributed the moderation primarily to a sharp decline in gasoline prices, which fell by 3.8% during the month. Food prices remained relatively stable, while shelter costs continued to exert upward pressure on the overall index.

The softer-than-expected inflation reading has raised hopes that the Federal Reserve may begin cutting interest rates later this year. Market participants now see a higher probability of a rate cut in September.

Federal Reserve Chair Jerome Powell welcomed the data but cautioned that the central bank will continue to monitor incoming information before making any policy decisions. “We are making progress on inflation, but we need to see sustained evidence before adjusting our stance,” Powell said in a statement.

The cooling inflation has boosted investor sentiment, with major US stock indices rising in early trading. The Dow Jones Industrial Average gained over 300 points, while the S&P 500 and Nasdaq also posted strong gains.

Analysts believe the report strengthens the case for a soft landing for the US economy. However, they warned that persistent shelter inflation and potential supply chain disruptions could still pose risks to the disinflation trend.

The June inflation data is expected to influence the Federal Reserve’s monetary policy decisions in the coming months and shape market expectations for the remainder of the year. Investors will be closely watching upcoming economic indicators for further clues on the trajectory of inflation and interest rates.