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Consumer prices in the U.S. increased modestly last month, registering the smallest monthly rise since March 2021, Reuters (subscription) reports.

What’s going on: The Consumer Price Index “gained 0.2% last month after edging up 0.1% in May, the Labor Department said on Wednesday. The CPI was lifted by rises in gasoline prices as well as rents, which offset a decrease in the price of used motor vehicles.”

• The index inched up 3.0% from 12 months ago, the smallest year-on-year increase in more than two years and less than the 3.1% year-on-year climb that Reuters-polled economists had forecast.

Why it’s important: “Annual consumer prices have retreated sharply from their 9.1% peak in June 2022, which was the biggest increase since November 1981 as last year’s large rises drop out of the calculation. Nevertheless, inflation remains well above the Fed’s 2% target, with the labor market still tight.”

Core CPI: Core CPI, which excludes the cost of food and energy, rose 0.2% in June, the first time in six months the reading has not been at least 0.4%.

• Core inflation is expected to continue to shrink in the coming months.