Inflation in the U.S. cooled in June for a third straight month, a sign that the worst price spike in four decades is steadily fading and may soon usher in interest rate cuts by the Federal Reserve.
In a better-than-expected report, consumer prices declined 0.1% from May to June after having remained flat the previous month, the Labor Department said Thursday. It was the first monthly decline in overall inflation since May 2020, when the economy was paralyzed by the pandemic.
And measured from one year earlier, prices were up 3% in June, cooler than the 3.3% annual rate in May.
The latest inflation readings will likely help convince the Fed’s policymakers that inflation is returning to its 2% target. A brief pickup in inflation early this year had caused Fed officials to scale back their expectations for interest rate cuts. The policymakers said they would need to see several months of mild price increases to feel confident enough to cut their key rate from its 23-year high.
Should inflation remain low through the summer, most economists expect the Fed to begin cutting its benchmark rate in September.
