US import prices post largest drop in seven months
US IMPORT prices fell more than expected in October amid a broad decline in the costs of goods, the latest indication that inflation was retreating.
Import prices dropped 0.8 per cent last month, the biggest drop since March, the Labor Department’s Bureau of Labor Statistics said on Thursday (Nov 16). Data for September was revised higher to show prices increasing 0.4 per cent instead of edging up 0.1 per cent as previously reported. Economists polled by Reuters had forecast import prices, which exclude tariffs, falling 0.3 per cent.
In the 12 months through October, import prices declined 2.0 per cent after decreasing 1.5 per cent in September. Annual import prices have now dropped for nine straight months. Data this week showed consumer prices were unchanged in October, while producer prices declined by the most in three-and-a-half years.
Subsiding inflation, together with easing labour market conditions and cooling consumer spending, have bolstered expectations that the Federal Reserve is done raising interest rates. Financial markets are anticipating a rate cut next May, according to CME Group’s FedWatch tool.
Since March 2022, the Fed has hiked its policy rate by 525 basis points to the current 5.25 per cent-5.50 per cent range.
Imported fuel prices dropped 6.3 per cent, reversing September’s gain. The cost of imported food fell 0.6 per cent after dropping 0.4 per cent in September. Excluding fuels and food, import prices dropped 0.2 per cent after dipping 0.1 per cent in September. These so-called core import prices decreased 1.3 per cent year on year in September.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The US dollar has strengthened against the currencies of the US’ main trading partners this year, helping to dampen imported inflation pressures.
Prices for imported capital goods dropped 0.2 per cent after being unchanged in the prior month. But the cost of motor vehicles, parts and engines rose 0.3 per cent following a 0.1 per cent gain in September.
Consumer goods, excluding automotives dipped 0.1 per cent after being unchanged in September. Higher borrowing costs are cooling domestic demand.
Prices of goods imported from China were unchanged after edging down 0.1 per cent in September. They dropped 2.8 per cent year-on-year in October, the largest decline since October 2009.
The report also showed export prices fell 1.1 per cent in October as prices for both agricultural and nonagricultural exports dropped. Export prices increased 0.5 per cent in September. They tumbled 4.9 per cent year-on-year in October after declining 4.3 per cent in September. REUTERS
Share with us your feedback on BT's products and services
