Forex▼ Bearish
US Core CPI Flat in June, Easing Pressure on Fed to Hike
US core CPI came in flat in June, below expectations, sending the 2-year yield down 6 bps and reducing bets on further Fed hikes. Next test: Chair Warsh's testimony.
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US consumer prices rose less than expected in June, with the core reading flat on the month – the softest since before the US-Iran conflict – and the headline taking its biggest one-month drop since April 2020, TD Bank economists said.
Headline CPI fell 0.4% month-on-month, the largest decline since April 2020 and well below the consensus forecast for a 0.2% rise. The yearly rate stepped down to 3.5% from 4.2% in May. The 5.7% drop in energy costs was the main driver. Food prices ticked up 0.2% and are up 3.0% on a twelve-month basis.
Core inflation, which strips out food and energy, was unchanged month-on-month, missing expectations for a 0.2% gain. On a twelve-month basis, core prices rose 2.6%, down from 2.9% in May and the slowest pace since before the US-Iran conflict, according to the TD Bank report.
Core goods prices fell 0.1% for the second straight month. Apparel dipped 0.6%, medical goods slipped 0.2%, and used vehicles edged down 0.2%. On a yearly basis, core goods are up 0.8%, the slowest since June 2025.