U.S. inflation slowed more than expected in June, giving risk assets fresh support after months of pressure from rising energy costs.
Summary
- US inflation cooled to 3.5% in June, beating forecasts as falling energy prices drove relief.
- Bitcoin rebounded toward $65,000 after softer CPI reduced immediate pressure for tighter Federal Reserve policy.
- Core inflation eased to 2.6%, while renewed Middle East tensions keep future energy risks elevated.
The annual Consumer Price Index fell to 3.5% from 4.2% in May, marking its first decline in five months and coming below the 3.8% market forecast.
The U.S. Bureau of Labor Statistics reported that consumer prices fell 0.4% from May, the largest monthly decline since April 2020. Core inflation, which removes food and energy costs, eased to 2.6% annually from 2.9% and remained unchanged during June.
Falling energy prices drive inflation lower
Energy prices remained 15.7% higher than a year earlier, but that was well below the 23.5% increase recorded in May. Gasoline inflation slowed to 26.7% annually, while the broader energy index fell sharply during June as oil markets received temporary relief from easing U.S.-Iran tensions.
Gasoline prices fell 9.7% during the month, helping offset increases in food and shelter costs. Food prices rose 0.2% from May and 3% from a year earlier. Shelter costs increased 0.1% monthly and remained one of the main areas where prices continued moving higher.
The headline decline also came in much stronger than economists expected. Markets had forecast a 0.1% monthly fall, compared with the reported 0.4% drop. Core CPI also beat expectations for a 0.2% monthly increase and a 2.8% annual gain.
Bitcoin rebounds as inflation fears ease
Bitcoin moved higher following the softer inflation report. As reported, BTC climbed nearly 5% to an intraday high of about $64,830 before trading near $64,560. The move followed a decline below $62,000 as renewed tensions between the U.S. and Iran weighed on markets.
The softer CPI data reduced immediate concerns that persistent inflation could force the Federal Reserve into tighter monetary policy. U.S. stock futures also moved higher, Treasury yields declined and the dollar weakened following the release. Bitcoin joined the broader recovery in risk assets.
Before the report, crypto.news reported that Bitcoin was trading near $62,500 as investors weighed higher oil prices and the possibility of another inflation surprise. The June CPI reading removed part of that immediate concern, although energy markets remain a source of uncertainty.
Core CPI gives markets another positive signal
Core inflation falling to 2.6% gave investors another measure of easing price pressure. The reading remains above the Federal Reserve’s long-term 2% inflation goal, but its decline from 2.9% showed that the June slowdown was not limited entirely to energy.
The next U.S. CPI report, covering July, is scheduled for Aug. 12. Markets will watch whether lower inflation continues or whether renewed increases in oil and gasoline prices reverse part of June’s decline.
Energy risks remain despite softer June CPI
The inflation report reflects economic conditions during June, when a temporary easing in U.S.-Iran tensions helped lower energy prices. Since then, renewed hostilities have again raised concerns about oil supplies and future transportation costs.
That leaves Bitcoin and other risk assets exposed to both inflation data and geopolitical developments. June’s softer CPI has eased near-term inflation pressure and supported Bitcoin’s recovery, but the next direction will depend on whether energy prices stay contained and whether the broader decline in core inflation continues.
