US Core Inflation Rate Below Forecasts

The US core inflation rate, excluding volatile food and fuel costs, fell to 2.6% in June 2026 from a seven-month high of 2.9% in May and below the expected 2.8%. The slowdown was driven by a modest easing in shelter costs (3.3% vs 3.4% in May) and softer price increases for other categories including airline fares (26.5% vs 27%), apparel (3.9% vs 4.8%); medical care (2% vs 2.6%) and household furnishings and operations (2.5% vs 3%). Month-over-month, core consumer prices were flat, after a 0.2% increase in May and undershooting market estimates of a 0.2% rise.

The US core inflation rate, excluding volatile food and fuel costs, climbed to 2.9% year-over-year in May 2026, matching market forecasts and reaching its highest level since September 2025. Key drivers included shelter (+3.4%), transportation services (+4.1%), medical care services (+3.6%), and apparel (+4.8%), while used cars and trucks (-2.0%) and medical care commodities (-1.8%) declined. Month-over-month, core consumer prices rose 0.2% in May, following a 0.4% increase in April, slightly below expectations of 0.3%.

The annual core inflation rate in the United States, which excludes food and energy, rose to 2.8% in April of 2026 from 2.6% in the previous month, slightly above market expectations of 2.7%. It was the sharpest core inflation rate since September of last year. Prices rose sharply for services less energy services (3.3%) amid higher costs for shelter (3.3%) and transportation services (4.3%). IN turn, prices rose sharply for apparel (4.2%), while they fell rose less for new vehicles (0.2%) and tumbled for used cars and trucks (-2.7%). From the previous month, core consumer prices rose by 0.4%, the sharpest increase since January 2025.