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[WASHINGTON] US import prices in August recorded their biggest drop in seven months as the cost of petroleum and a range of goods fell, indicating that a strong dollar and soft global demand continued to put downward pressure on imported inflation.
The Labour Department said on Thursday import prices fell 1.8 per cent last month, the largest decline since January, after an unrevised 0.9 per cent drop in July. Import prices have now declined in 12 of the last 14 months.
Economists had forecast import prices falling 1.6 per cent.
In the 12 months through August, prices declined 11.4 per cent, the largest drop since September 2009.
Very low inflation, in the face of a tightening labour market and strengthening economic growth, poses a challenge for Federal Reserve officials as they contemplate raising interest rates for the first time in nearly a decade.
The Fed's policy-setting committee will meet on Sept 16-17. Economists are divided on whether the U.S. central bank will raise rates at that meeting in the wake of recent volatility in global financial markets, which was sparked by fears of slower growth in China and other major emerging markets.
Last month, imported petroleum prices tumbled 14.2 per cent, the biggest drop since January, after falling 5.9 per cent in July. Import prices excluding petroleum slipped 0.4 per cent, reflecting the impact of the dollar's 17.5 per cent rise against the currencies of the United States' main trading partners since June 2014.
In August, imported food prices rose 0.3 per cent after being flat in July. Prices for imported capital goods fell 0.2 per cent, as did prices for imported automobiles.
The report also showed export prices fell 1.4 per cent, also the largest drop in seven months. Export prices slipped 0.4 per cent in July. They were down 7.0 per cent in the 12 months through August, the biggest drop since July 2009.