US inflation cooled last month as the cost of gas, clothes, and used cars fell, providing some relief to consumers, while underlying price pressures also cooled more than expected.

Inflation Drop

Prices dropped 0.4% in June from May, the largest monthly drop in four years, the Labor Department said Tuesday. On a yearly basis, inflation declined to 3.5%, down from a year-over-year gain of 4.2% in May and lower than many economists expected.

Yet oil prices rose for a second day Tuesday as the United States renewed attacks on Iran and President Donald Trump announced a new blockade in the Strait of Hormuz, a key shipping route for about one-fifth of the world’s oil.

Core Inflation

Excluding the food and energy categories, core prices were unchanged in June, a positive sign that underlying inflation is cooling. On a yearly basis, core prices rose just 2.6%, down from 2.9% the previous month. Core inflation remains above the Fed’s target of 2%.

A wider range of prices cooled last month than economists had forecast. Electricity prices, which have been elevated by spiking demand from data centers, fell 1% from May to June, though they are still 4% higher than a year ago.

Clothing prices dropped 0.6% from May to June but are 3.9% more expensive than a year earlier. Groceries rose 0.2% from May to June and are up 2.7% from last year, while apartment rental costs cooled, rising just 0.1% last month and 2.8% from a year ago.

Original reporting: NBC Connecticut — read the source article.