Consumer price inflation in the United States fell to 2.3% annually in June 2026, reaching its lowest level since March 2021 and bringing the Federal Reserve's long battle against post-pandemic inflation close to its declared 2% target. The June reading was below the 2.6% recorded in May and lower than the 2.5% Wall Street forecast.
Core inflation, which strips out food and energy, fell to 2.4%. The primary drivers of the deceleration were a 4.1% annual decline in gasoline prices, moderating shelter costs as apartment construction completed across major cities, and lower prices for used vehicles and consumer electronics.
The softer reading boosted expectations for a Federal Reserve rate cut in September to 78% probability, up from 61% before the release. Treasury yields fell sharply as bond markets priced in more aggressive monetary easing through the end of 2026.
