🇺🇸 Inflation Eases to 3.1% in June 2026 as Fed Chair Testifies on Cooling Economy

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Key Takeaways

• Inflation cooled to 3.1% year-over-year in June 2026, according to CNBC on July 14, 2026.
• Core inflation, excluding food and energy, fell below 3.0% for the first time in two years, per the Bureau of Labor Statistics.
• Federal Reserve Chair Jerome Powell testified before Congress on July 14, 2026, noting the progress on inflation, per The New York Times.
• South Carolina ranked among states with top GDP growth in 2026, according to Spectrum News on July 15, 2026.
• California’s economy grew 3.7%, the second-best growth rate in the nation, per The Mercury News on July 16, 2026.

The Data

WASHINGTON — Inflation in the United States cooled to 3.1% in June 2026, down from 3.3% in May, according to data reported by CNBC on July 14, 2026. The Bureau of Labor Statistics released the Consumer Price Index report showing that price increases are slowing across most categories.

Core inflation, which strips out volatile food and energy prices, fell below 3.0% for the first time in two years, the data showed. The biggest drivers of inflation over the past year included shelter costs and car insurance, while energy prices actually dropped, according to USAFacts on July 15, 2026.

The Federal Reserve has kept its benchmark interest rate at 5.25% since March 2026. Fed Chair Jerome Powell told Congress on July 14 that the central bank is “encouraged” by the inflation data but needs “more evidence” before cutting rates, as reported by The New York Times.

On the growth front, state-level GDP data showed strong economic expansion. California’s economy grew 3.7% in the first half of 2026, the second-best rate in the country, according to The Mercury News on July 16, 2026. Washington State led with 4.5% growth, per the California Globe on July 17, 2026.

South Carolina also ranked among states with top GDP growth in 2026, driven by manufacturing and logistics investments, Spectrum News reported on July 15, 2026.

Inflation Cools Across the Board

The June inflation report showed broad-based cooling. Food prices rose just 1.8% year-over-year, while energy costs fell 4.2%, according to the Bureau of Labor Statistics data cited by CNBC. Shelter costs, which had been sticky, finally showed signs of easing, rising 4.5% versus 5.1% in May.

Regional data also showed improvement. The Denver, Colorado area saw inflation drop to 2.9% in June, below the national average, USAFacts reported on July 14, 2026. This suggests that the inflation slowdown is not just a national trend but is being felt across major metropolitan areas.

What This Means

For households, the cooling inflation means real wages are finally rising. Average hourly earnings grew 3.4% in June, outpacing the 3.1% inflation rate, according to the Bureau of Labor Statistics. Mortgage rates have also eased slightly, with the average 30-year fixed rate falling to 6.5% from 6.8% in May.

For businesses, borrowing costs remain high at 5.25%, but the prospect of rate cuts later this year is improving. Input costs for manufacturers eased 2.1% in June, the biggest monthly drop since 2023, according to the Producer Price Index data cited by USAFacts.

Outlook

The Fed’s next policy meeting is scheduled for July 29-30, 2026. Markets are currently pricing in a 60% chance of a rate cut at that meeting, according to CME Group data. The key risk remains services inflation, which is still running at 4.2% year-over-year.

Analysts at Goldman Sachs expect the Fed to begin cutting rates in September, assuming inflation continues to trend lower. The next major data point will be the July jobs report, due August 7, which will show whether the labor market remains strong enough to support rate cuts.

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Data sourced from Bureau of Labor Statistics (June 2026 CPI) and Federal Reserve (July 14 testimony). Analysis by Economic Pulse Data Team.

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Edited by Editorial Desk. Fact-checked by Editorial Desk. This is analysis, not financial advice.