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US inflation increased only slightly in June 2023. (Source: CNN) |
The consumer price index (CPI) rose 0.2% in June, after rising 0.1% in May. Housing costs, including rent, accounted for 70% of June's CPI increase. Meanwhile, food prices rose just 0.1%.
Compared to the same period last year, the US CPI increased 3.0% in June 2023, the lowest annual increase since March 2021.
Core CPI, which strips out volatile food and energy prices, rose 0.2% in June, the smallest increase since August 2021 and the first time in six months that the core CPI increase was below 0.4%.
Airfares fell 8.1%, the biggest drop in nearly a year. Prices for communications services, furniture and household goods also fell. Health care costs and prescription drug prices were unchanged. However, service prices rose 0.3%, matching the increase in May.
The slowdown in inflation also means consumers are gaining more purchasing power. Weekly earnings of private workers, adjusted for inflation, rebounded 0.5% in June 2023 and were up 0.6% year-over-year.
The data reinforces speculation that the US Federal Reserve (Fed) may stop raising interest rates after another 0.25 percentage point increase at its meeting this July.
According to CME's FedWatch tool, most financial markets are predicting that the Fed will raise interest rates by 25 basis points at its upcoming policy meeting from July 25-26.
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