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[WASHINGTON] US import prices recorded their biggest drop in seven months in March as the cost of petroleum declined, but the underlying trend pointed to a moderate rise in imported inflation as the dollar's rally fades.
The Labor Department said on Wednesday import prices fell 0.2 per cent last month, the largest drop since August, after an upwardly revised 0.4 per cent increase in February.
That lowered the year-on-year increase in import prices to 4.2 per cent from 4.8 per cent in February.
Economists polled by Reuters had forecast import prices slipping 0.2 per cent last month after a previously reported 0.2 per cent increase in February.
The drop in import prices is unlikely to be sustained with oil prices pushing higher in recent days amid rising geopolitical tensions following last week's US missile strike on Syria and reports that Saudi Arabia wants to extend production cuts enacted in January for another six months.
Despite weak imported price pressures, domestic inflation is rising. Most consumer inflation measures have pushed above the Federal Reserve's two per cent target.
Prices for imported petroleum fell 3.6 per cent last month, the biggest drop since August, after increasing 1.3 per cent in February. Import prices excluding petroleum increased 0.2 per cent after rising 0.3 per cent the prior month.
Import prices excluding petroleum have now increased for three straight months, in part reflecting an ebb in the US dollar's rally. Prices for imported capital goods edged up 0.1 per cent in March after rising 0.2 per cent in February.
Imported consumer goods prices excluding automobiles fell 0.2 per cent last month after gaining 0.3 per cent in February. The cost of imported food fell 0.7 per cent last month after increasing one per cent in February.
The report also showed export prices rose 0.2 per cent in March after advancing 0.3 per cent the prior month.
Export prices increased 3.6 per cent from a year ago, the biggest rise since December 2011. That followed a 3.2 per cent gain in February.