Energy Prices Ease In June, Dropping U.S. Inflation To 3.5% Annually

• U.S. inflation fell 0.4% month-over-month in June 2026, the biggest drop since April 2020, bringing annual inflation down to 3.5% from 4.2% in May.
• Energy prices, particularly gasoline, saw significant monthly decreases (around 9.7%) due to increased oil tanker traffic following a U.S.-Iran deal.
• The AI boom is driving up electricity costs (up 4% year-over-year) and computer software/accessories prices (up 17.4% year-over-year), while tariffs impact computer and apparel prices.
• Housing prices, including rent and owners' equivalent rent, are showing signs of normalizing, though median housing prices hit a record high of $440,600 in June 2026.

The June 2026 Consumer Price Index (CPI) showed a significant easing of inflation, with a 0.4% month-over-month drop and annual inflation falling to 3.5% from a three-year high of 4.2% in May. This relief was largely driven by a substantial fall in energy prices due to an Iran deal, despite rising costs in electricity and computer software influenced by the AI boom and data center build-out. Housing prices are normalizing but remain at an all-time high.