After two years of painfully high prices, inflation in the United States has reached its lowest point in more than two years — 3% in June compared with 12 months earlier — a sign that the Federal Reserve’s interest rate hikes have steadily slowed price increases across the economy.

The consumer price index (CPI) inflation figure the government reported Wednesday was down sharply from a 4% annual rate in May, though still above the Fed’s 2% target rate. Over the past 12 months, gas prices have dropped, grocery costs have risen more slowly and used cars have become less expensive.

From May to June, overall prices rose 0.2%, up from just 0.1% in the previous month but still comparatively mild.

At the same time, underlying inflation remains persistently high and a nagging concern for the Fed, which is all but certain to increase its key interest rate again when it meets in two weeks. The Fed has raised its benchmark rate by a substantial 5 percentage points since March 2022, the steepest pace of increases in four decades.

On a month-to-month basis, though, economists have estimated that prices rose 0.3% from May to June, up from 0.1% the previous month. Gas prices are expected to have risen, with grocery prices unchanged. Economists have predicted that used-car prices fell from May to June after two months of steep increases.

The expected decline in overall CPI over the past 12 months would bring the figure much closer to the Fed’s 2% target and reflect the progress the central bank has made in slowing price acceleration. Consumer inflation reached a peak of 9.1% in June 2022. Since then, gas prices have tumbled, food-cost increases have slowed and the costs of some other goods, such as furniture, have declined.

Economists expect used-car prices to keep falling over the coming months. And even housing costs, which have risen significantly, have begun to cool, as apartment construction has reached a four-decade high.