US inflation cooled in June, with the Personal Consumption Expenditures price index falling 0.1% from the previous month, the first monthly decline since the pandemic outbreak in 2020, according to BlockBeats on July 30. The annual headline reading slowed to 3.7% from May’s three-year high of 4.1%.
Core PCE rose 0.1% on the month and eased to 3.3% year over year from 3.4%. Even so, it has remained above the Federal Reserve’s 2% target for a sixth straight year. The report said lower oil prices following a temporary ceasefire agreement between the US and Iran were the main driver behind the inflation cooldown.
Consumer demand stayed firm in June and Q2
On the spending side, the figures were stronger. Inflation-adjusted consumer spending increased 0.4% in June, matching the fastest pace since July 2025.
Second-quarter GDP growth slowed on the surface, with annualized growth easing to 1.5% from 2.1% in the first quarter. But domestic private final sales, which exclude net exports, inventories and government spending, rose 3.9%. That was more than double the first-quarter pace and the highest level since the start of 2023.
Consumer spending, which makes up about two-thirds of the economy, also accelerated sharply, rising from 0.5% to 3.2%. BlockBeats said low unemployment, tax cuts and a boom in AI investment supported household consumption and business capital spending.
Energy prices remain a key risk for the second half
Energy costs are still seen as the main risk in the second half of the year. Average regular gasoline prices reached $4.22 a gallon in the second quarter, well above the level of less than $3 before the conflict. Oil prices also moved higher again this month.
Consumer-facing companies are already seeing an effect. According to the report, Procter & Gamble and other consumer goods companies have observed that shoppers are becoming more price sensitive.
Fed holds rates steady, but divisions widen
A day before the GDP report, the Federal Reserve voted 9-3 to keep its policy rate unchanged at 3.5% to 3.75%. Three regional Fed presidents dissented and backed a 25 basis-point rate increase.
Warsh said, “The economy has shown impressive resilience.” The broader camp favoring higher rates pointed to growing internal disagreement over the policy path ahead.