US inflation cools to 3.5% in June, biggest monthly CPI drop since 2020 lifts Wall Street

US inflation eased more than expected in June, offering fresh relief to financial markets and strengthening expectations that the Federal Reserve may refrain from further interest rate hikes. According to the latest Consumer Price Index (CPI) data, headline inflation slowed to 3.5 per cent year-on-year, below the market expectation of 3.8 per cent. Core inflation, which excludes volatile food and energy prices, also moderated to 2.6 per cent, beating forecasts of 2.8 per cent.

On a monthly basis, consumer prices fell 0.4 per cent, marking the steepest month-on-month decline since May 2020 and the first monthly drop in US consumer prices in six years.

The softer-than-expected inflation print triggered a strong rally in US stock futures, with investors betting that easing price pressures could reduce the need for additional monetary tightening by the Federal Reserve. The market reaction comes after US equities had recently witnessed their biggest monthly decline since April 2020.

More from Business

The latest inflation data suggest that underlying price pressures are continuing to ease, reinforcing hopes that the US central bank may adopt a more cautious stance on interest rates in the months ahead.