US inflation cools surprisingly to 3.5 percent

US inflation cooled more than anticipated in June, offering a glimmer of relief to consumers and potentially complicating the Federal Reserve's next move. Consumer prices rose 3.5% from the previous year, falling short of economists' forecasts of 3.8% and marking a decrease from May's 4.2% rate.

The core inflation rate, which strips out volatile energy and food prices, also showed a downward trend, falling to 2.6% in June from 2.9% in May. This measure is closely watched by the Fed as it provides a clearer picture of underlying inflationary pressures.

Despite the encouraging slowdown, the persistent elevated inflation could still pose a challenge for the US central bank. Federal Reserve Governor Christopher Waller has indicated that interest rates might need to be raised soon if inflation continues to run significantly above the Fed's 2% target. The Fed had previously held its benchmark interest rate steady in June, but signaled a potential tightening of policy later in the year.

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The Federal Reserve may need to raise interest rates soon if inflation continues to run significantly above the central bank of the USA's target of two percent.