US consumer prices fell for the first time in six years in June, while the key measure of core inflation remained virtually unchanged, somewhat easing pressure on the FR to raise interest rates.
The Consumer Price Index (CPI) fell 0.4% month-on-month, compared to an expected 0.1% decline and a 0.5% increase the previous month. Year-on-year inflation was 3.5%, compared to a forecast of 3.8% and the previous figure of 4.2%. Core CPI, which excludes food and energy prices, rose 2.6% year-on-year – below the expected 2.8% and the 2.9% in May.
The dollar fell in response to the release. At the time of writing, the USD index was trading at 100.76, down 0.52% since the start of trading. The daily low was 100.60. Meanwhile, Federal Reserve Chairman Kevin Warsh declared that members of the Federal Reserve's committee have "no tolerance" for persistently high inflation and reiterated his pledge to rein in price increases, which have remained elevated for five years.
"Members of our committee have no tolerance for persistently high inflation," Warsh said in a speech scheduled for 10 a.m. Tuesday. "And we share a strong commitment to restoring price stability."
Since taking office in May, the new Fed chairman has consistently emphasized his determination to combat inflation and has identified the right monetary policy as his top priority.
"If we get policy right—and we will—the inflation surge of the last five years will be a thing of the past," Warsh said in testimony before the House Financial Services Committee.