The inflation rate in America declined to an annualized 2.5% in June, according to data from the U.S. Commerce Department.
The Personal Consumption Expenditures (PCE) price index increased 0.1% month-over-month in June and was up 2.5% from a year ago.
Both readings for June were inline with the consensus expectation of economists, according to Dow Jones Newswires.
The annualized inflation reading of 2.5% in June was down from 2.6% in May of this year.
Core inflation, which strips out volatile food and energy prices, showed a monthly increase of 0.2% and a year-over-year rise of 2.6% in June, both readings inline with forecasts.
The PCE is important as it is the preferred inflation rate of the U.S. Federal Reserve.
The lower inflation rate in June bolsters the case for the U.S. central bank to begin lowering interest rates in September of this year.
Futures traders are currently betting 100% that the U.S. Federal Reserve will cut interest rates by 25-basis points at its September meeting.
While inflation in the U.S. continues to be above the central bank’s annualized target of 2% it has fallen substantially from a peak above 9% in June 2022.
The U.S. Federal Reserve’s trendsetting Fed Funds Rate is currently at a range of 5.25% to 5.50%, its highest level in more than 20 years.