U.S. Inflation Eases in June: CPI Decreases to 3%, Core Rate Slides to 4.8%, Surpassing Expectations

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The U.S. inflation rate, as measured by the Consumer Price Index (CPI), experienced a slight decrease in June, according to the Bureau of Labor Statistics (BLS). On a year-over-year basis, it slipped to 3.0% from the previous 4.0% recorded in May. This result was slightly lower than the expected decline to 3.1%. Furthermore, on a monthly basis, the CPI showed a moderate increase of 0.2% in June, compared to a 0.1% rise in May. However, it fell short of the anticipated growth of 0.3%.

The core CPI, which excludes the unpredictable costs of food and energy, decreased to 4.8% from its previous level of 5.3%. This result was lower than the projected rate of 5.0%. Additionally, the monthly core CPI for June was 0.2%, compared to 0.4% in May and the expected rate of 0.3%.

After remaining stagnant between $30,000 and $31,000 for several days, the price of bitcoin (BTC) saw a modest uptick to $30,900 immediately after the report's publication. Nevertheless, it soon relinquished those gains and retreated back to slightly below $30,800.

The latest report indicates a further decrease in headline inflation, as June's rate of 3% is significantly lower than the peak of 9.1% observed in 2022. Particularly noteworthy for policymakers at the Federal Reserve is the slight movement in the core inflation rate, which dropped to 4.8% from 5.3%, ending its persistent stay above 5% this year. This 4.8% year-over-year level marks the slowest pace since October 2021, which holds considerable significance.

However, both the markets and the Federal Reserve (if we are to trust recent statements) are still expecting another increase in interest rates as the Federal Open Market Committee (FOMC) convenes later this month. According to the CME's FedWatch tool, there is a 91.1% probability that the FOMC will raise rates during its meeting scheduled for July 25-26.

Despite the positive inflation news, bitcoin remains relatively stable, while traditional markets are experiencing significant shifts. The U.S. 10-year Treasury yield has declined by 6 basis points to 3.91%, and the 2-year yield has dropped by 14 basis points to 4.73%. Additionally, the dollar index has experienced a 0.5% decline, while stock index futures indicate a potential gain of almost 1% at the market opening.