---
title: "Comprehensive cooling of inflation! The US June CPI turned negative for the first time in four years on a month-on-month basis, with the core year-on-year growth rate hitting a new low in over three years"
type: "News"
locale: "zh-CN"
url: "https://longbridge.com/zh-CN/news/208601515.md"
description: "Expectations for interest rate cuts within the year have significantly increased, with the likelihood of the first rate cut in September rising to 80%, and the probability of a rate cut in July resurfacing"
datetime: "2024-07-11T13:39:51.000Z"
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  - [zh-CN](https://longbridge.com/zh-CN/news/208601515.md)
  - [en](https://longbridge.com/en/news/208601515.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/208601515.md)
---

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# Comprehensive cooling of inflation! The US June CPI turned negative for the first time in four years on a month-on-month basis, with the core year-on-year growth rate hitting a new low in over three years

In June, U.S. inflation cooled significantly, with the overall CPI month-on-month growth rate turning negative for the first time in four years, and the core year-on-year growth rate hitting a new low in over three years. Expectations for interest rate cuts within the year have significantly increased, with the likelihood of a first rate cut in September rising to 80%, and the probability of a rate cut in July reappearing.

On Thursday, July 11th, the U.S. Department of Labor released data showing that the U.S. CPI rose by 3% year-on-year in June, slightly lower than the expected 3.1%, and further declined from the previous value of 3.3%, with a 0.1% month-on-month decrease, in line with expectations, and the first negative turn since May 2020.

The core CPI in June (excluding more volatile energy and food prices) rose by 3.3% year-on-year, lower than the expected 3.4% and the previous value of 3.4%, marking the lowest level since April 2021; with a 0.1% month-on-month increase, below the expected and previous values of 0.2%, representing the smallest increase since August 2021.

The closely watched super inflation indicator (core services CPI excluding housing) rose by 0.1% month-on-month, but the year-on-year increase fell below 5.0%.

Following the data release, U.S. stock index futures surged, U.S. bond yields quickly fell, with the 10-year Treasury yield dropping by nearly 10 basis points, and the U.S. dollar index extending its decline.

## Will there be three rate cuts this year?

It is worth noting that this is the third consecutive time that CPI has fallen below Wall Street expectations, reigniting expectations for a rate cut in July, with both the 3-month and 6-month annualized inflation rates showing declines.

However, the probability of a rate cut in July is still very low at the moment.

Meanwhile, derivative traders have raised the probability of the Fed starting rate cuts in September from around 70% before the data release to over 80%. For the full year 2024, contracts imply a rate cut of 57 basis points, indicating at least two 25 basis points rate cuts; Earlier by about 49 basis points.

"The prerequisites for starting rate cuts in September and issuing a series of subsequent rate cut signals are now in place," said Ed Al-Hussainy, interest rate strategist at Columbia Threadneedle Investment.

Traders expect a 25% chance of the Fed cutting rates three times by 25 basis points within the year.

## Gasoline prices fall, housing inflation is accelerating slowdown

By sector, the year-on-year inflation rates for goods and services both declined **, with the price increase for goods narrowing to the lowest level since February this year.**

**** Specifically:

In June, energy prices rose by 1% year-on-year, fell by 2.0% month-on-month, the same as the previous month. Among them, after a 3.6% month-on-month decline in May, gasoline prices fell by 3.8% in June, offsetting the impact of rising housing prices; down by 2.5% year-on-year.

Prices of used cars and trucks fell by 1.5% month-on-month, communication costs fell by 0.2%, and new car prices fell by 0.2%.

**Focusing on housing inflation in the core CPI, it is accelerating its slowdown:**

> Looking at the month-on-month data, housing prices rose by 0.2% in June. Among them, rents rose by 0.3% that month, and the Owners' Equivalent Rent (OER) also rose by 0.3%, **both the smallest increases since August 2021.** In addition, the index for lodging away from home fell by 2.0% in June, compared to a 0.1% decrease in May.
> 
> Looking at the year-on-year data, the housing inflation rate in June fell by 5.16% year-on-year, lower than the 5.41% in May, the lowest level since May 2022; rent inflation rose by 5.07% year-on-year in June, lower than the 5.30% in May, the lowest level since April 2022.
> 
>

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