US Inflation Fell on Cheap Gas, But That Relief is Already Fading

June’s inflation slowdown came largely from one source: cheaper fuel. Gasoline prices fell 12% during the month, helping pull both producer and consumer prices lower. But that relief may already be fading. Brent crude has risen 18% in one week since the Strait of Hormuz blockade returned.

The producer price index fell 0.3% in June, while consumer prices dropped 0.4%. Both figures benefited heavily from lower energy costs, which renewed fighting between the US and Iran is now reversing.

US PPI just dropped to 5.5% in June, below the 6.2% expectation.Core PPI fell to 4.7% (expected 5.2%), while MoM PPI dropped -0.3%, the biggest decline since April 2025.Wholesale pressures are retreating across the supply chain, further lowering the odds of future rate hikes. pic.twitter.com/dpsMeJGmWn

— BeInCrypto (@beincrypto) July 15, 2026

How Gasoline Drove June’s Price Decline

Gasoline’s 12% drop accounted for almost two-thirds of the 1.4% fall in prices for final demand goods. Without cheaper fuel, producer prices would have increased slightly.

The decline spread further through the supply chain. Prices for processed goods used by businesses fell 1.2%, according to the Bureau of Labor Statistics. Unprocessed materials dropped 4.1%.

Services remained more resistant to price declines. Trade margins rose 0.4%, while core producer prices increased 0.2% from the previous month.

Much of the energy relief followed the Islamabad Memorandum, a June 17 ceasefire that paused the US-Iran war. Brent crude had surged 63% during the first month of the conflict and reached $118 in late March.

By July 1, it had fallen back to $70, wiping out its wartime gains. The latest escalation is now pushing prices higher again.

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The Hormuz Blockade Rewrites the Energy Math

That foundation cracked on July 8, when the truce collapsed after Iran allegedly struck commercial ships. President Donald Trump then announced a reinstated naval blockade on Monday.

🚨BREAKING: TRUMP SAYS THE US-IRAN CEASEFIRE IS "OVER""To me, I think it's over. I don't want to deal with them anymore.""They're scum… They're sick people.""And they're vicious, violent people.""As far as I'm concerned, it's over." pic.twitter.com/s4EKdI4rYE

— Coin Bureau (@coinbureau) July 8, 2026

US Central Command said the blockade took effect at 4 p.m. ET on Tuesday. Brent rose 9.6% on Monday alone and traded above $85 by Wednesday.

The strait carries roughly a fifth of the world’s oil. MarineTraffic recorded 57 transits from Friday through Sunday, down more than 50% from the prior week. Before the war began in February, Hormuz handled roughly 130 transits a day.

Washington disputes the shortage story. The Department of Energy said 8.5 million barrels crossed the strait on Sunday with military assistance, matching typical flows.

Thanks to the U.S. military and President Trump, oil is moving through the Strait of Hormuz.Yesterday, 8.5 million barrels of oil transited through the Strait, consistent with the recent average. This puts the Arabian Gulf Region flows at about 15 million barrels per day.The… pic.twitter.com/YdooAjq1YV

— U.S. Department of Energy (@ENERGY) July 13, 2026

However, the usual shock absorber is missing this time. The Strategic Petroleum Reserve sits at its lowest level since 1983. Sparta Commodities analyst June Goh warns the remaining buffer is nearly empty.

“The mini-glut of oil has now evaporated, with a fresh eye of a potential of disruptions ​from the Bab el-Mandeb Strait if Houthis are joining the attacks,” she noted.

Governments have few cushions left. A G7 discussion earlier this year weighed releasing up to 400 million barrels during a previous spike. Meanwhile, TD Securities strategist Bart Melek sees $100 oil as possible if physical shortage risks become real.

What It Means for the Fed

Fed Chair Kevin Warsh, in office since May, told Congress this week that he will not tolerate persistently elevated inflation. Markets currently price an 87.7% chance of a July 29 hold.

A renewed oil shock could revive the Fed hike bets that faded after this week’s soft data. The base effect cuts the same way. Gasoline remains nearly 43% higher than a year ago, so June’s relief came off an elevated base.

“There’s no near-term pressure on the Fed, but oil is in the driver’s seat over the longer term. Energy saved the day in June, but that might become ancient history if the Strait of Hormuz doesn’t open soon,” said David Russell, global head of market strategy at TradeStation, via AP

The July prints will settle the question. If Hormuz stays closed, the disinflation that crushed hike odds may prove a truce artifact, not a trend.