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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.

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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.


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