WASHINGTON: US import prices fell for the first time in seven months in July, helped by a strong dollar and lower fuel and non-fuel costs, while consumers’ one-year inflation outlook ebbed in August, the latest signs that price pressures may have peaked.
Import prices, which exclude tariffs, fell 1.4 per cent last month after rising 0.3pc in June, the Labour Department said yesterday.
That was the largest monthly drop since April 2020 and exceeded the 1pc decline expected by economists. In the 12 months through July, import prices gained 8.8pc after a 10.7pc rise in June, marking the annual rate’s fourth straight monthly decline.
The report followed other tentative indications earlier this week that inflation was finally coming off the boil. US consumer prices were unchanged in July due to a sharp drop in the cost of petrol, after advancing 1.3pc in June, although underlying price pressures remained elevated. Producer prices also declined last month on the back of lower energy costs.
“Declining import prices and producer prices support the ... thesis that the economy is past headline peak inflation,” said Jeffrey Roach, chief economist at LPL Financial.
The Federal Reserve is mulling whether to raise its benchmark overnight lending rate by 50 or 75 basis points at its next policy meeting on September 20-21, as the US central bank battles to cool demand across the economy and bring inflation back down to its 2pc goal. The Fed has raised its policy rate by 225 basis points since March.
Imported fuel prices dropped 7.5pc last month after surging 6.2pc in June. Petroleum prices declined 6.8pc, while the cost of imported food fell 0.9pc, the largest one-month drop since November 2020 and third straight monthly decline.
Excluding fuel and food, import prices dropped 0.5pc. These so-called core import prices decreased 0.6pc in June. They rose 3.8pc 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 10pc against the currencies of main trade partners of the US since the beginning of the year.
The report also showed export prices fell 3.3pc in July after accelerating 0.7pc in June. Prices for agricultural exports declined 3pc, with the fall led by lower prices for soybeans, wheat and cotton.
Non-agricultural export prices fell 3.3pc. Export prices rose 13.1pc on a year-on-year basis in July after increasing 18.1pc in June.
US consumer sentiment ticked further up in August from a record low earlier this summer and American households’ near-term inflation outlook eased again on the back of the sharp drop in petrol prices, a survey from the University of Michigan showed.
The survey’s preliminary August reading on the overall index on consumer sentiment came in at 55.1, up from 51.5 in the prior month. It had hit a record low of 50 in June.
The preliminary August reading was above the median forecast of 52.5 among economists.
The survey’s one-year inflation expectation fell to a six-month low of 5pc from 5.2pc, while the survey’s five-year inflation outlook edged up to 3pc from 2.9pc, holding within the range that has prevailed for the past year.