US inflation dips for first time since 2020 as PCE falls 0.1pc

(Sharecast News) - US inflation eased in June, with the Federal Reserve's preferred gauge posting its first monthly decline since 2020, reinforcing the central bank's decision to keep interest rates unchanged. The Bureau of Economic Analysis' headline personal consumption expenditures price index fell 0.1% on the month, driven largely by lower oil prices following a temporary truce between the US and Iran. The annual rate slowed to 3.7%, down from 4.1%, though was still well above the Fed's 2% target.

The key core PCE measure, which strips out energy and was watched closely by policymakers, rose just 0.1% on the month, while its annual rate eased to 3.3% from 3.4%, offering a modest sign of cooling underlying pressures.

However, the report also underscored lingering uncertainty, with the drop heavily influenced by a pullback in oil prices, and with geopolitical tensions unresolved, inflation was still considered likely to remain above 3% into year‑end - potentially keeping pressure on the US central bank to act. The central bank has stressed it wants clearer evidence of disinflation before considering rate cuts, but officials have also been wary of tightening policy further given a fragile labour market and the risk of slowing economic growth.















Reporting by Iain Gilbert at Sharecast.com