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Inflation increased 0.2% over the month of June and is up just 3% compared to a year ago, according to the latest Consumer Price Index released on Wednesday.

The inflation rate for the 12-month period ending in June for all items marked the smallest all-items increase since March 2021, the U.S. Bureau of Labor Statistics reported. Inflation has eased significantly since hitting a 40-year high of 9.1% a year ago.

However, the latest 3% annual inflation rate is still higher than the 2% target set by the Federal Reserve Board, which has been attempting to curb inflation with interest rate increases to slow the economy. The Fed has already signaled that it intends to raise the benchmark federal funds interest rate when it meets next on July 25-26.

The stock opened higher following the release of the better-than-expected CPI news.

The Consumer Price Index Summary found that the shelter was the largest contributor to the 0.2% all-items monthly rise in costs, accounting for over 70% of the increase, with the index for motor vehicle insurance also contributing. The food index increased 0.1% in June after increasing 0.2% the previous month. The energy index rose 0.6% on a monthly basis in June.

The monthly index for all items less food and energy also rose 0.2% in June, the smallest 1-month increase in that index since August 2021. Indexes which increased in June include shelter, motor vehicle insurance, apparel, recreation, and personal care. The indexes for airline fares, communication, used cars and trucks, and household furnishings and operations were among those that decreased over the month.

Viewed on an annual basis, the index for all items less food and energy has risen 4.8% over the last 12 months.

The energy index decreased 16.7% for the 12 months ending in June, and the food index increased 5.7% over the year.