U.S. Consumer Prices Fall 0.4% in June as Gasoline Plunge Triggers Largest Monthly Drop Since 2020

U.S. consumer prices fell 0.4% in June from the previous month, the sharpest monthly decline since April 2020, as a steep drop in gasoline prices pulled down the overall inflation reading, according to data released Tuesday by the Bureau of Labor Statistics.

The monthly decline marked a notable cooling after a hotter May reading, but inflation has not disappeared. Over the 12 months ending in June, the consumer price index was still up 3.5% on an unadjusted basis. Core CPI, which excludes food and energy and is watched as a measure of underlying price pressures, was unchanged in June on a seasonally adjusted basis and rose 2.6% from a year earlier.

“This decline in the all items index was the largest 1-month decrease since April 2020 when it fell 0.8 percent,” the BLS said in its Consumer Price Index report.

Energy was the main driver of the June drop. The energy index fell 5.7% for the month, the largest contributor to the overall decline, the BLS said. Within that category, gasoline prices dropped 9.7% on a seasonally adjusted basis. Even so, energy costs remained well above year-ago levels: The energy index was up 15.7% from June 2025, while gasoline was up 26.7%.

Food prices continued to edge higher. The food index rose 0.2% in June and was up 3.0% over the past 12 months. Outside food and energy, the report showed a mixed picture. Major indexes that fell in June included motor vehicle insurance, communication, apparel, medical care, and used cars and trucks, while recreation, household furnishings and operations, and personal care increased.

The June report was a reversal from May, when headline CPI rose 0.5% for the month and 4.2% from a year earlier. The composition of the June data helps explain that swing: volatile energy prices, especially gasoline, drove the monthly decline, while the year-over-year inflation rate remained elevated. At the same time, flat core CPI in June suggested less pressure in categories outside food and energy than in the prior month.

The inflation report arrived the same day Federal Reserve Chair Kevin Warsh was scheduled to testify before Congress, giving the data added relevance for the near-term policy discussion. The Fed last month left its benchmark interest rate unchanged at 3.50% to 3.75%. While CPI is one of the best-known inflation measures, the central bank’s formal inflation target is 2% based on a different gauge, the personal consumption expenditures price index, not CPI.