I really don't put a lot of stock in reading levels tbh. They teach now in such an arse backwards way, confuse the poor buggers, have limited books to choose from depending what level you are. It's all bollocks.
I taught my kids to read before they started school and I'm so glad I did because school just sucks the fun out of books.
I just did what my mum did with me, take them to the library every week, pick some books that they actually WANT to read, including one that's a bit more challenging for them and sit with them for half hour at bedtime, helping them with it. All of them love books and reading so far.
I taught full word recognition, very little phonics although I did teach them to sound out unfamiliar words and use the context to work out what they meant and I covered the house in post it notes with everythings name on it. My youngest is now 3 so she is starting to learn do forever tripping over bits of paper with Fridge, Door, Chair written on them.
Spellings, we do Look, Cover, Write, Check.
Inference will be helped by mystery type books and just talking with you about what is happening in them and what do they think the character is feeling/thinking/will do next?
Just build his confidence up and let him pick his own reading books, even if they're a bit difficult. If he really wants to read it, he'll work harder at it.