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Petroleum, strong dollar depress US import prices

[WASHINGTON] US import prices fell more than expected in October as the cost of petroleum and a range of goods declined, a sign that a strong dollar and soft global demand continued to exert downward pressure on imported inflation.

The Labor Department said on Tuesday import prices dropped 0.5 per cent last month after a revised 0.6 per cent decline in September. Import prices have now fallen in 14 of the last 16 months.

Economists had forecast import prices slipping 0.1 per cent after a previously reported 0.1 per cent fall in September.

In the 12 months through October, prices tumbled 10.5 per cent. Dollar strength and a sharp decline in oil prices have weighed on inflation, which is persistently running below the Federal Reserve's 2 per cent target.

Weak inflation pressures, however, are unlikely to deter the US central bank from raising interest rates next month after job growth surged in October and the unemployment rate fell to a 7-1/2-year low of 5.0 per cent.

A tightening labor market could give Fed officials confidence that inflation will gradually move toward its target.