US import prices fall more than expected in July

US import prices decreased more than expected in July, the Labor Department said on Friday(Aug 12), largely on lower costs for both fuel and nonfuel products.

Import prices fell 1.4 per cent last month after rising 0.3 per cent in June, the data showed. In the 12 months through July, import prices increased 8.8 per cent after rising 10.7 per cent in June.

Economists polled by Reuters had forecast import prices, which exclude tariffs, would decline 1.0 per cent from June.

The report follows tentative signs earlier this week that inflation had peaked, with US consumer prices unchanged in July due to a sharp drop in the cost of gasoline, although underlying price pressures remained elevated. Producer prices also declined last month on the back of lower energy costs.

The Federal Reserve is mulling whether to raise its benchmark overnight lending rate by another 50 or 75 basis points at its next policy meeting on Sept 20-21, as the US central bank battles to cool demand across the economy and bring inflation back down to its 2 per cent goal. The Fed has raised its policy rate by 225 basis points since March.

Imported fuel prices dropped 7.5 per cent last month after surging 6.2 per cent in June. Petroleum prices declined 6.8 per cent, while the cost of imported food fell 0.9 per cent, the largest one-month drop since November 2020.

SEE ALSO

US producer prices fall in July, underlying inflation slows

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

Excluding fuel and food, import prices dropped 0.5 per cent. These so-called core import prices decreased 0.6 per cent in June. They rose 3.8 per cent on a year-on-year basis in July. The strength of the US dollar is helping keep a lid on core import prices.

The dollar has gained around 10 per cent against the currencies of the United States’ main trade partners since the beginning of the year.

The report also showed export prices fell 3.3 per cent in July after accelerating 0.7 per cent in June. Prices for agricultural exports declined 3.0 per cent, with the fall led by lower prices for soybeans, wheat and cotton. Nonagricultural export prices fell 3.3 per cent. Export prices rose 13.1 per cent on a year-on-year basis in July after increasing 18.1 per cent in June. REUTERS