US inflation rate down to 3% in June, a two-year low, but prices remain high

Even though inflation has continued to go down, price increases still remain higher than the Fed’s 2% annual target rate, meaning more interest rate hikes could come. Photograph: Michael Reynolds/EPA

The rising cost of US goods and services slowed to a two-year low in June, a sign that inflation is continuing to ease as the economy responds to the US Federal Reserve’s rapid increases in interest rates.

The latest consumer price index (CPI) figures, which measure the prices of a basket of goods and services, increased 3% over the last year. This was the smallest increase since March 2021 and down from a four-decade high of 9.1% in June 2022 as pandemic supply chain issues clashed with burgeoning consumer demand.