U.S. Inflation Dropped to 3.5% in June as Energy Prices Fell

The Consumer Price Index fell to 3.5% year-over-year in June, down from 4.2% in May—a sharp drop driven mainly by falling energy costs. The monthly CPI declined 0.4%, an unusual reversal that sent markets repricing Federal Reserve rate-hike odds sharply lower. Whether this energy-driven dip holds depends on July and August data ahead.