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provide a brief of the current rate of inflation in the US in the last year
Current inflation in the US (last 12 months, June 2024 - June 2025)
The latest data from June 2025 indicates that the annual inflation rate in the US stands at 2.7%, as measured by the Consumer Price Index (CPI). This marks an increase from May's 2.4% rate, making it the highest since February. Core inflation, which excludes volatile food and energy prices, also edged up to 2.9% in June, marking the first increase since January 2025.
While inflation has significantly cooled down from its peak in 2022 (when it reached a 40-year high of 9.1%), these figures suggest a bumpy path back to the Federal Reserve's target of 2% inflation.
Key drivers and factors
Shelter costs remain the primary driver of inflation, accounting for roughly half of the increase over the past year.
Food prices continue to rise, particularly food away from home, which increased 3.8% annually.
Energy prices have seen some volatility, with gasoline prices down 8.3% over the year but natural gas prices up 14.2%.
Tariffs imposed by the Trump administration are beginning to have an impact, contributing to the recent rise in goods prices.
Federal Reserve's response
The Federal Reserve has maintained a cautious stance on interest rate cuts due to the persistent inflation pressures and uncertainty surrounding the impact of tariffs. While they implemented rate cuts in late 2024, officials are taking a more measured approach in 2025. The current target range for interest rates is 4.25-4.5 percent.
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