U.S. 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.

However, 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.

Impact on Consumers

Many Americans have soured on the economy after five years of elevated inflation, posing a risk to Trump and Republicans in the upcoming midterm elections.

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.

Other signs of where prices are headed are mixed. The Federal Reserve Bank of New York said last week that a survey found that nearly half the companies in its region that have paid tariffs still plan to lift their prices further.

Walmart last week said it was rolling back prices on thousands of items, including ground beef, potato chips, toys, and clothes. President Donald Trump praised the move on social media and sought to take credit for the reduction, though the company did not mention Trump in its announcement.

Original reporting: NBC10 Boston — read the source article.