US CPI Cools to 3.5% in June as Energy Prices Post Biggest Drop Since 2020A · FULL TRANSLATION
- US June CPI rose 3.5% year over year, down from 4.2% in May and below forecasts
- The energy index fell 5.7% on the month, the largest drop since April 2020
- Core CPI held at 2.6% annually and was flat month over month
- Cooling inflation revives Fed cut expectations, with knock-on effects for the yen
US inflation finally posted its first meaningful cooldown in five months, and oil did nearly all the work. June CPI slowed to 3.5% from May's 4.2%, under forecasts; the energy index plunged 5.7% on the month—the steepest since April 2020—with gasoline down over 9%. Core CPI at 2.6%, flat on the month, says underlying inflation is comparatively tame once energy noise is stripped out.
For readers in Japan and Taiwan, the transmission runs through rates and currencies. Cooler inflation gives the Fed room to cut; firming September expectations would narrow the US-Japan rate gap, in theory the yen's rescue line at 163. Mind the reverse script, though: renewed Middle East escalation could claw back this energy drop, deflating cut expectations and amplifying the yen's structural weakness another notch. Details per the JETRO report.
Per JETRO's report, the US Consumer Price Index rose 3.5% year over year in June, decelerating sharply from 4.2% in May and coming in below market expectations—the first cooldown in five months. The decline was driven chiefly by energy: the energy index fell 5.7% on the month, the largest monthly drop since April 2020, with gasoline and fuel oil each down more than 9%.
Core CPI, excluding food and energy, rose 2.6% from a year earlier and was flat on the month, indicating relatively stable price pressure outside energy. On an annual basis, however, energy prices remained 15.7% above year-ago levels, leaving full normalization some distance away. (Details per the BLS and JETRO originals.)