Again, for the second straight month, the US import prices dropped in the month of August, weighed down by reducing costs for petroleum products and a strong dollar, which over time could support lower inflation, reported Reuters.
Import prices declined 1.0% last month after falling 1.5% in July, the Labor Department stated on Thursday. In the 12 months through August, import prices raised 7.8% after climbing 8.7% in July. Economists polled by Reuters had forecast import prices, which exclude tariffs, dropping 1.2% month-on-month.
According to the data published on Wednesday, showing a second monthly decline in producer prices in August, weak import prices should further assuage fears of inflation becoming entrenched.
Further, the government earlier this week reported an unexpected growth in consumer prices in August, which cemented expectations for a third 75 basis points interest rate hike from the Federal Reserve next Wednesday.
The decline in import prices also suggests an easing of bottlenecks in the global supply chain. Also, Imported fuel prices dropped 6.8% last month after decreasing 7.5% in July. Petroleum prices declined by 7.1%, while the cost of imported food dropped by 1.6%.
Excluding fuel and food, import prices dipped 0.1%. These so-called core import costs declined 0.5% in July. They raised 3.8% on a year-on-year basis in August. Dollar strength is enabling to limit the growth in core import prices.
The dollar has acquired 7.5% against the currencies of the United States' main trade partners since January.
Moreover, the report also showed export prices declined 1.6% in August after falling 3.7% in July. Prices for agricultural exports declined 0.4% as lower prices for corn, fruit, meat, and wheat offset higher prices for soybeans and vegetables. Non-agricultural export prices declined by 1.8%. Export
prices raised 10.8% year-on-year in August after rising 12.9% in July.