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US inflation slows to 3.5% in June as gasoline costs drop
The year to June CPI rose 3.5%, but Brent crude jumped to $87 after renewed strikes and the Strait of Hormuz blockade, raising the risk inflation reaccelerates.
US inflation eased in June as energy costs fell, but officials warned the slowdown could be temporary. According to data from the Bureau of Labor Statistics, prices rose 3.5% in the year to June, down from 4.2% in May.
Gasoline prices were a key driver of the monthly cooling, dropping 9.7% last month, though they remain higher than a year ago. AAA said the national average rose to $3.86 a gallon from $3.79 a week earlier.
Oil market pressures threaten to feed back into consumer prices, BBC Business reported. Brent crude hit $87 a barrel on Tuesday, up almost $10 in 24 hours after fresh US military strikes on Iran, including a declared naval blockade in the Strait of Hormuz and a 20% charge on cargo shipped through the route.
Analysts said the latest escalation makes it more likely inflation will rise in coming months and that near-term interest rate cuts are unlikely. Ipek Ozkardeskaya at Swissquote Bank said gasoline is already back above June levels, and newly appointed Federal Reserve chairman Kevin Warsh said the Fed has no tolerance for persistently elevated inflation.
Latest closeWTI crude $78.04 ▲9.3%|Brent $83.15 ▲9.4%|Gasoline (RBOB) $2.974 ▼0.4%