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US inflation cools in June as gasoline prices fall
Gasoline dropped 9.7% year on year in June, but AAA data show pump prices have already edged back up as Brent crude rose on Middle East tensions.
US inflation eased in June as energy costs fell, according to data from the Bureau of Labor Statistics reviewed by BBC Business. The annual inflation rate was 3.5% in the year to June, down from 4.2% in May, driven by lower gasoline prices.
Gasoline prices decreased 9.7% last month, but they remain higher than a year ago. Ahead of the next inflation report, AAA data showed the national average rose to $3.86 a gallon from $3.79 a week earlier.
The report warns the recent slowdown could prove temporary as renewed conflict in the Middle East pushes oil prices higher. Brent crude climbed to $87 a barrel on Tuesday, up almost $10 in 24 hours after US military strikes on Iran, including a new naval blockade in the Strait of Hormuz and a 20% charge on cargo shipped through the waterway.
Analysts cited in the article said the oil-driven price pressure could lift inflation in coming months and make interest rate cuts less likely. BBC Business also notes newly appointed Federal Reserve chairman Kevin Warsh said the Fed has no tolerance for persistently elevated inflation, while the Fed previously kept rates between 3.5% and 3.75% at its June meeting.
Latest closeWTI crude $78.04 ▲9.3%|Brent $83.15 ▲9.4%|Gasoline (RBOB) $2.974 ▼0.4%