Energy prices ticked up 0.6% in June from the previous month, but the sector's year-over-year decline has helped cool overall inflation, with fuel oil and gasoline down significantly.
The Bureau of Labor Statistics' latest Consumer Price Index reading showed energy declining 16.7% in June from last year, making it the category with the steepest decline. The downward trend in the energy sector helped bring down the overall rate of inflation to 3%, its lowest level since March 2021.
"Headline inflation continues its slower trend, though energy prices have recently stabilized. Consumers continue to benefit from much lower prices than a year ago," Rob Haworth, senior portfolio manager at U.S. Bank Wealth Management told Yahoo Finance.
Many of the components within the energy space are down significantly compared to last year.
Gasoline prices are down 26.6% compared to 2022. Natural gas is 18% lower, and fuel oil is 36.6% cheaper than a year ago.
The energy index has been volatile month over month, with June’s reading showing a reversal from the 3.6% decline in May. Part of that has to do with some components, which were mixed.
Gasoline prices increased 1% in June from the previous month after decreasing 5.6% in May. Electricity rose 0.9% after falling in the prior three months. Electricity is one of the segments that is still up 5.4% year-over-year.
Oil prices rose on the heels of the print as the dollar index dropped. A weaker greenback tends to lift crude prices, which are denominated in dollars.
Crude futures had already been trading at a 10-week high prior to the print, with West Texas Intermediate (CL=F) hovering above $75 per barrel. Brent (BZ=F) is trading above $80.
The Energy Information Administration raised its oil demand forecast for 2023, and Saudi Arabia, one of the world’s largest oil producers, extended its supply cuts in an effort to prop up prices.
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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