Milder Inflation Keeps Door Open to September Rate Cut

U.S. inflation eased in June even more than economists had expected, extending a recent slowdown in price increases and boosting investors’ hopes that the Federal Reserve could soon start cutting interest rates.

The consumer-price index, a measure of goods and services costs across the economy, rose 3.0% from a year earlier, the Labor Department said Thursday, and fell 0.1% since May.

Core prices, which exclude volatile food and energy items, climbed 3.3% over the previous 12 months and 0.1% since May. All results marked a decline from the previous month and were lower than what economists polled by The Wall Street Journal had forecast.

Another month of very mild inflation keeps the door wide open to a September interest-rate cut, especially if Fed officials conclude the labor market is slowing in a way that either diminishes a potential source of ongoing inflation or risks further unwelcome weakness.