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US Consumer Price Index (CPI) inflation cooled in June to 3.5 per cent from 4.2 per cent in May on the back of a big drop in gasoline prices, bringing some respite to consumers who were bearing the brunt of higher pump prices of gasoline.
The core inflation, which excludes energy and food prices, which are highly volatile, was flat for the month of June. The annual core inflation rate came in 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," the release from the Bureau of Labor Statistics said. The drop in headline inflation, however, may not sustain as the global crude oil prices have started climbing again after falling to pre-conflict levels last month. The latest spike in crude oil prices came after renewed hostilities between Iran and the US as both sides engaged in fresh strikes, threatening prospects of a durable peace. The global crude oil prices climbed to their highest in a month, with Brent crude oil prices at USD 86 and the US West Texas Intermediate at USD 80. High 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. The interim peace agreement signed between the two sides in June led to oil prices cooling to pre-conflict levels. The critical Strait of Hormuz is again in the spotlight with US President Donald Trump bringing back the blockade of the strait and threatening to impose of 20 per cent fee on the transit of cargo. US Federal Reserve Governor Christopher Waller, in a speech on Monday, said that the central bank shouldn't "fight the last war" on inflation. He said that he is aware of the situation and the Fed won't repeat past mistakes, referring to the post-COVID phase when the central bank came under criticism for responding late to rising inflation. The delay cost the economy dearly as the inflation became more entrenched. Higher inflation is also a big worry for President Trump as he faces the mid-term elections in November. 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. (ANI)
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