Markets are still betting on a quarter point rate rise when the Jerome Powell's Federal Reserve meets at the end of the month despite a bigger than expected fall in inflation. Photograph: Mandel Ngan / AFP via Getty ImagesUS inflation dropped to 3 per cent in June, lower than expected, in the latest sign that the Federal Reserve’s interest rate rises are having an effect on price pressures.
The annual increase in the consumer price index slowed from 4 per cent in May to 3 per cent, the slowest rate of inflation since March 2021. Prices increased 0.2 per cent on a monthly basis in June, up from 0.1 per cent the previous month but less than economists had forecast. The annual figure was further helped by so-called base effects, as extremely large rises from June 2022 drop out of the calculations.
There was a more modest dip in the “core” CPI, which slowed to an annual rate of 4.8 per cent in June from 5.3 per cent. Core prices, which strip out volatile food and energy costs, rose 0.2 per cent month on month, compared with 0.1 per cent in May.
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