US Consumer Price Index (CPI) inflation eased to 3.5% in June from 4.2% a month earlier, helped by a steep fall in gasoline prices. The decline provides some relief to consumers who were bearing the brunt of elevated fuel costs amid Iran-US conflict in the Middle East.
The core inflation, which excludes the highly volatile energy and food prices, remained flat in June, taking some pressure off the to raise interest rates further. The annual core inflation rate stood at 2.6%.
“The index for energy fell 5.7 per cent in June after rising 3.9 per cent in May, 3.8 per cent in April, and 10.9 per cent in March. The energy index was the largest contributor to the monthly all-items decrease, more than offsetting increases in other indexes, including those for shelter and food,” according to a Bureau of Labor Statistics report published on Tuesday.
In recent weeks, oil prices had declined as concerns over supply disruptions in the Gulf subsided following an interim US-Iran agreement that improved the outlook for crude shipments. The United Arab Emirates (UAE), in particular, successfully boosted exports by deploying shuttle tankers that operated with their tracking transponders switched off.
Oil prices rebound, raising inflation concerns again
The easing in headline inflation may prove short-lived as global crude oil prices have started climbing again after falling to pre-conflict levels last month,.
The latest rally has been driven by renewed hostilities between the US and Iran, with both sides launching fresh strikes on each other that have heightened concerns over disruptions to oil supplies.
The global crude oil prices climbed to their highest in a month, with oil prices at $86 and the US West Texas Intermediate at $80, news agency ANI said in a report on Tuesday.
To make things worse, US President Donald Trump said on Monday that Washington would reinstate a naval blockade on Iran, intensifying its battle with Tehran over control of the , a critical maritime chokepoint through which nearly 20% of the world’s oil supplies were transported before the US and Israel attacked Iran on February 28, 2026.
The American leader also said the US would protect traffic in the Strait but demanded reimbursement equivalent to 20% of all cargo shipped.
Trump under pressure as fuel prices rise
Elevated energy prices have been the main driver of headline inflation this year after the start of the US-Iran conflict at the end of February.
Higher inflation is also emerging as a political challenge for Trump ahead of the November mid-term elections. Seeking to rein in fuel costs, Trump had warned the US oil companies to bring down the pump prices of gasoline and had ordered the Justice Department to launch a probe, the news agency reported.
