US import prices drop in May on energy, food

US IMPORT prices fell in May and the annual decrease in prices was the sharpest in three years, providing another boost for the Federal Reserve in the fight against inflation.

Import prices dropped 0.6 per cent last month as the costs of energy products and food declined after increasing 0.3 per cent in April, the Labor Department said on Thursday (Jun 15).

Economists polled by Reuters had forecast import prices, which exclude tariffs, dropping 0.5 per cent.

In the 12 months through May, import prices plunged 5.9 per cent. That was the biggest year-on-year decline since May 2020 and followed a 4.9 per cent fall in April. Annual import prices have now decreased for four straight months.

The government reported this week that consumer prices edged up in May, while producer prices fell.

The Fed kept interest rates unchanged on Wednesday for the first time since March 2022 when the US central bank embarked on its fastest monetary policy tightening campaign in more than 40 years. But the Fed, which has hiked its policy rate by 500 basis points in this tightening cycle, still anticipated rate increases this year.

Imported fuel prices fell 6.4 per cent last month after increasing 4.1 per cent in April. Petroleum prices dropped 5.9 per cent, while natural gas tumbled 26.1 per cent. The cost of imported food fell 1.1 per cent.

Excluding fuel and food, import prices edged up 0.1 per cent. These so-called core import prices dipped 0.1 per cent in April. The dollar has been bouncing around versus the currencies of the United States’ main trade partners this year.

Prices for imported capital goods ticked up 0.1 per cent in May. The cost of consumer goods excluding motor vehicles was unchanged.

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US producer inflation subsides as energy, food prices fall

The report also showed export prices declined 1.9 per cent in May after slipping 0.1 per cent in April. Prices for agricultural exports dropped 2.1 per cent weighed down by corn, soybeans and wheat.

Non-agricultural export prices fell 1.8 per cent. Export prices plummeted 10.1 per cent year-on-year in May, the biggest annual decrease since the government started tracking the series in September 1984, after dropping 6.0 per cent in April. REUTERS