US data from June showed that inflation cooled last month, though it’s likely not enough to stop the Federal Reserve from further hiking interest rates.

The Consumer Price Index — a closely-monitored measure of inflation that tracks changes in the costs of everyday goods and services — rose 3% in June versus a year earlier, according to data released by the US Bureau of Labor Statistics on Tuesday.

That was short of the 3.1% increase economists expected and is the smallest advance since March 2021. The number was also lower than May’s 4% increase.

Last June, inflation had peaked at 9.1%.

The core CPI — which excludes volatile food and energy prices — rose 0.2% from a month ago, marking the smallest one-month increase in that index since August 2021, the Bureau of Labor Statistics reported.

Core CPI excluding food and energy costs was up 4.8% over the last 12 months, lower than the 5.0% increase economists expected.

Shelter was the largest contributor to last month’s increase — accounting for more than 70% of the rise — followed by motor vehicle insurance, apparel, recreation and personal care.

The food index increased 5.7% over the last year, with food prices rising 0.1% from May to June.

Egg prices, however, fell 7.9% last month after dropping 13.8% in May.

The airline fares index saw the steepest decline in June, falling 8.1% month-over-month.

Following the release of the CPI report, stocks rose.

The Dow Jones Industrial Average gained 0.3%, while the S&P 500 climbed 0.7% and the tech-focused Nasdaq popped 1.2%.

The latest figures come after the Fed agreed to hold interest rates steady at 5% to 5.25% at the June meeting as a way to buy time and assess whether further rate hikes would be needed.

“Almost all” Fed officials reportedly agreed on the pause — which comes after a 10-meeting streak of rate hikes.

However, “some participants” wanted to move ahead with a rate hike in an effort to reach the bank’s 2% inflation goal.

Fed Chair Jerome Powell has also said that “the process of getting inflation back down to 2% has a long way to go.”

The contrast between the Fed’s stated concern over still-high inflation and its decision to skip a rate hike has heightened uncertainty about its next moves.

Thus, the central bank is expected to continue to hike rates in July, and there’s about a one-in-three chance of another increase before the end of the year.

Last week’s job report was another indicator that more rate hikes are imminent as figures showed a resilient labor market with low unemployment and high wages.

The US economy added 209,000 job in June, a slight decrease from the robust 339,000 jobs that were gained in May.

Unemployment was little changed month-over-month, from 3.6% from 3.7% — still slightly above the five-decade low of 3.4%.

Fed officials have said they think strong hiring can often fuel inflation if companies feel compelled to raise pay to attract and keep workers.

Thus, a slowdown in job growth and pay raises could help the Fed reach its 2% inflation target.