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Inflation drops at fastest pace in six years, but experts warn relief may not last
Inflation fell nearly half a percent in June, driven by cheaper gas prices, but rising oil costs and global tensions could reverse the trend, experts say.
Inflation fell nearly half a percent in June, marking the largest monthly drop since 2020, but experts warn the relief may be temporary due to rising oil prices and global conflicts.
The decline was driven by gas prices falling nearly 10%, which offset continued increases in food and housing costs. President Donald Trump commented on the drop, saying, “Prices are way down. Prices are coming way down, and we’re going to bring them much lower yet.”
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Federal Reserve Chairman Kevin Warsh cautioned against premature optimism. “There might be some that look at this morning’s data and say, ‘Oh, mission accomplished. Everything is swell.’ That is not my view,” Warsh said.
Global tensions are adding uncertainty to the outlook. On Tuesday, Iran launched new attacks on regional partners after the U.S. conducted strikes for the fourth consecutive day, driving oil prices significantly higher compared to a week ago.
“The fact that energy prices help bring this headline inflation rate down, that reverses next month, and we could see elevated headline inflation right back in the news,” said Tyler Schipper, an economist at the University of St. Thomas.
Experts warn that higher oil prices could quickly impact gas prices and eventually push up the cost of other goods.
In other developments, Trump announced he is backing away from a plan to charge ships a 20% fee to pass through the Strait of Hormuz. He said Gulf leaders called him after the announcement and offered to invest billions of dollars in the U.S. instead. “Ships will not be charged to pass through the strait,” Trump said, though he added that he still wants the U.S. compensated for protecting the area.
The president also addressed the FBI investigation into the late Sen. Lindsey Graham’s home, dismissing conspiracy theories surrounding Graham’s sudden death. “White House doctors explained that Graham suffered a rupture that was extremely difficult to detect,” Trump said, adding that he does not see evidence of foul play.
Looking ahead, Trump teased a “really, really big” announcement on election machines and election integrity, set for Thursday night, though he did not provide further details.
