US Inflation Eases Temporarily Amid Renewed Middle East Tensions

US inflation slowed in June, but the easing is likely to be temporary as renewed hostilities in the Middle East raise oil prices. The Personal Consumption Expenditures (PCE) Price Index increased 3.7% in the 12 months through June after advancing by an unrevised 4.1% in May.

The moderation in PCE inflation reflected a retreat in oil prices amid a fragile US-Iran ceasefire, which has since fallen apart. Brent oil prices are hovering just above $90 a barrel, while average US gasoline prices have risen back above $4 a gallon.

Excluding the volatile food and energy components, the PCE Price Index rose 3.3% on a year-over-year basis in June after increasing 3.4% in May. The Federal Reserve tracks the PCE inflation measures for its 2% target.