Tumbling oil prices in June are likely to provide some welcome good news for inflation, though it likely won’t move the needle much for Federal Reserve policymakers. Economists widely expect that the consumer price index , a broad measure of the costs for goods and services across the U.S. economy, will show a decline of 0.2% for the month, according to the Dow Jones consensus. That would put the headline rate at 3.8%, down 0.4 percentage point from May. The projected drop stems from a slide in energy prices — U.S. crude oil plunged about 25% in June, reversing a sharp surge earlier that helped send inflation up to its highest level in more than three years. @CL.1 line 2026-06-01 oil prices Wall Street also is expecting that softer prices for autos and shelter also will help paint a more optimistic picture when the Bureau of Labor Statistics releases the CPI report Tuesday at 8:30 a.m. ET. “I do expect a deceleration of headline inflation due to declining oil prices, starting with the inflation data we get this week,” Fed Governor Christopher Waller said in a speech Monday. However, he noted that he “will be focused on core inflation, and on that count, there are recent signs of continued pressure on goods prices.” On that account, the news isn’t as good. The forecast is for an increase of 0.2% for core, with the annual rate at 2.8% as other factors continue to keep the pace of price increases well above the Fed’s 2% target. In particular, Waller noted the impact that the artificial intelligence boom is having, outweighing the waning impact from tariffs and the energy reversal. Price increases for related goods and services should get a close watch in the CPI report. There’s also considerable uncertainty with inflation as tensions continue between the U.S. and Iran, leading to a spike Monday in oil prices and Treasury yields. Waller said policymakers should avoid tightening too quickly to stave off inflation, but added he will need to see several more months of good inflation data to dissuade him from favoring rate hikes. Markets, meanwhile, are pricing in a rate hike as soon as September. The CPI release comes during a busy and important week for economic data and the U.S. central bank. In addition to the inflation report, Fed Chairman Kevin Warsh will kick off a two-day appearance on Capitol Hill as part of the mandated semiannual “Humphrey Hawkins” reports on monetary policy. This will be Warsh’s first such hearing since taking office in May. He will face the House finance committee first, then the Senate banking committee on Wednesday. Beyond that, the BLS will release its wholesale price gauge Wednesday, while the Commerce Department will present the retail sales figures for June on Thursday. Debit and credit card spending surged 6.3% annually in June, the strongest in four years, helping to keep a floor under prices amid still-strong consumer demand, according to Bank of America. “This is going to be a huge week,” Mohamed El-Erian, chief economic adviser at Allianz and professor at the Wharton School, said on CNBC. “We get the inflation data, we get [Chairman] Walsh going up to Congress, we get the retail sales data, and all this within major transformations going on.” El-Erian said he expects the price reports to show “the peak of the inflation cycle, retail sales to stay pretty strong, and continuing to see this fundamental transition to a more modern, forward-looking, reform-oriented Federal Reserve that’s dragging the rest of central banking with it.”
