Cooling inflation brings relief, but it may be temporary

Inflation eased in June for the first time in six years, offering welcome relief to households struggling with high living costs.

The relief came as energy prices fell sharply following a temporary ceasefire agreement between the US and Iran.

Consumer prices fell 0.4% from May, the biggest monthly decline in four years—thanks to lower gasoline, clothing, and used car prices.

Annual inflation also dropped to 3.5%, down from 4.2% in May. Core inflation, which excludes food and energy, slowed to 2.6%, showing that price pressures are easing across much of the economy.

The latest figures reduce the likelihood of an immediate Federal Reserve interest rate hike, as policymakers continue to monitor inflation trends. Lower electricity costs and slower rent increases also helped cool prices.

However, economists warn that the progress may not last as renewed conflict in Iran could drive up energy prices and disrupt supply chains, pushing inflation higher.