U.S. import prices in July posted their biggest decline in six months fueled largely by the falling cost of petroleum products, among other goods. The Labor Department report released Thursday indicates inflation could remain well below the Federal Reserve target for at least several more months.
Import prices dropped 0.9 percent last month, which is the largest fall since January, after largely staying sideways in the month of June. Import prices have now declined in 11 of the last 13 months. In the 12 months through July, prices dropped 10.4 percent.
Economists had forecast import prices declining by 1.1 percent after a previously reported 0.1 percent dip in June.
Last month, imported petroleum prices fell 5.9 percent after rising 1.6 percent in June. Excluding petroleum, they fell by 0.3 percent due to impact of a strong dollar. The dollar has gained 15.7 percent against the currencies of the United States’ main trading partners since June 2014, which is a direct result of expectations that the Federal Reserve will raise interest rates this year. A retail sales report also released Thursday came in stronger-than-expected, indicating the Fed will stick to their target of a mid-September rate hike.
In July, imported food prices were unchanged after dropping 0.7 percent in June. Prices for imported capital goods fell 0.2 percent and were unchanged for automobiles. The report also showed export prices slipped 0.2 percent last month after falling 0.3 percent in June. Export prices dropped 6.1 percent in the 12 months through July.