U.S. inflation eases to 3.5% in June as gas prices fall

U.S. inflation cooled in June, driven by a sharp drop in gasoline prices, but the relief for consumers may be short-lived as renewed conflict in the Middle East pushes oil prices higher again. The Consumer Price Index rose 3.5 percent over the year ending in June, according to data released Tuesday by the Bureau of Labor Statistics, a notable decline from the 4.2 percent annual rate recorded in May.

The primary driver of the slowdown was a 9.7 percent monthly decrease in gasoline prices, which brought the national average below $4 per gallon for the first time since March. However, even as the June report showed improvement, prices at the pump have already begun to climb, averaging $3.86 a gallon on Tuesday, up from $3.79 a week ago. This reversal follows the collapse of a ceasefire between the United States and Iran and a new U.S. naval blockade in the Strait of Hormuz, a critical global oil shipping route. The price of Brent crude oil surged nearly 10 percent in 24 hours, reaching $87 a barrel on Tuesday.

Beyond volatile energy costs, underlying price pressures remain persistent. Core inflation, which excludes food and energy, was flat from May to June, and the annual core...