Inflation cools more than expected in June as gas costs fall, underlying prices ease

Inflation cools more than expected in June as gas costs fall, underlying prices ease reports a sharper-than-expected slowdown in U.S. inflation during June. The Labor Department said prices fell 0.4% from May to June, the largest monthly drop in four years, bringing year-over-year inflation down to 3.5% from 4.2% in May. Underlying inflation pressures also eased: excluding food and energy, core prices were unchanged in June, and rose 2.6% year over year versus 2.9% the prior month. The report cited declines in gas costs, clothing and used cars, along with falling electricity prices and softer apartment rental growth. Economists said this suggests the recent gas price spike tied to the Iran conflict has not yet translated into broad, sustained inflation. The Federal Reserve kept its key rate around 3.6% last month, and the news could reduce pressure for a rate hike. Oil prices rose for a second day as the U.S. renewed attacks on Iran and announced new moves regarding the Strait of Hormuz.