The Consumer Price Index (CPI) slowed to 3.5 percent year-over-year in June, according to the Bureau of Labor Statistics’ report Tuesday morning, down from 4.2 percent in May.

The bureau’s energy index declined 5.7 percent in June, offsetting increases in other indexes including housing and food. Core CPI, which removes volatile items like food and energy, declined by 0.3 percent to 2.6 percent year-over-year. 

Energy prices declined following the June 17 memorandum of understanding between the U.S. and Iran that allowed the Strait of Hormuz to reopen following Iran’s closure of the sea lane. Average unleaded regular gas prices declined from $4.61 in May to $4.20 in June, according to the Bureau’s Average Price Data release. 

Markets place an 85.6 percent chance of the Federal Reserve maintaining the current level of interest rates at its upcoming July 29 meeting, as higher-than-target inflation maintains pressure on the Fed to raise rates.