US Inflation Falls to 3.5% in June as Energy Prices Drop
The Consumer Price Index dropped to 3.5% year-over-year in June 2026, down from 4.2% in May, driven by falling energy prices after a ceasefire between the US and Iran. Gasoline prices fell 9.7% and food inflation eased, signaling relief for renters and shoppers.
The US inflation rate fell sharply in June, marking the first decline in five months and giving hope to households struggling with rising costs. Inflation decreased to 3.5% in June from 4.2% in May of 2026. The good news: energy costs declined significantly. Energy costs declined 5.7%, with gasoline dropping 9.7%.
The driver was international: A ceasefire between the US and Iran alleviated inflationary pressures from the energy component. Inflation also slowed for shelter (3.3% vs 3.4%) and food (3% vs 3.1%).
However, inflation remains above the Federal Reserve's 2% target. The Consumer Price Index for July 2026 is scheduled to be released on August 12, 2026, at 8:30 A.M. Eastern Time. That July reading will show whether the June slide holds or energy costs rebound.
What this means for expats: If you are paying rent or considering a mortgage, this slowdown in shelter inflation (though still elevated) may provide some relief in coming months. For those paid in home currency and converting to USD to send savings, the decline signals energy-driven inflation risks are—for now—fading, though broader price pressures remain. Monitor the August 12 data release closely.
Sources
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