U.S. import prices drop the most in over two years

© Reuters. A stack of shipping containers are pictured in the Port of Miami in Miami© Reuters. A stack of shipping containers are pictured in the Port of Miami in Miami

WASHINGTON (Reuters) – U.S. import prices fell the most in more than two years in June as prices for petroleum products fell and a strong dollar weighed on the costs of other goods, pointing to benign import inflation pressures.

The Labor Department said on Friday import prices dropped 0.4 percent last month, the largest decline since February 2016. Data for May was revised to show import prices increasing 0.9 percent instead of rising 0.6 percent as previously reported.

Economists had forecast import prices edging up 0.1 percent in June. In the 12 months through June, import prices increased 4.3 percent after advancing 4.5 percent in May.

Last month, prices for imported petroleum decreased 0.8 percent after accelerating 7.4 percent in May. June’s drop reflected a decline in prices.

Excluding petroleum, import prices slipped 0.3 percent in June, the largest drop in two years, after gaining 0.1 percent in the prior month. Import prices excluding petroleum rose 1.4 percent in the 12 months through June.

Last month’s decline in import prices excluding petroleum likely reflects the dollar’s strength.

The greenback gained 1.6 percent against the currencies of the United States’ main trading partners in June. The dollar has firmed 3.8 percent on trade-weighted basis so far this year, which could help to offset some of the boost to import prices from tariffs on lumber, steel and aluminum.

Import prices for nonfuel industrial supplies and materials increased 0.3 percent in June, driven by higher prices for metals and paper, after rising 0.8 percent in the prior month.

The cost of imported capital goods fell 0.1 percent for a second straight month. Prices of imported motor vehicles also slipped 0.1 percent in June after a similar drop in the prior month. The cost of consumer goods excluding automobiles declined 0.3 percent, the biggest drop since November 2016.

Prices for goods imported from China were unchanged in June after edging up 0.1 percent in the prior month. They rose 0.5 percent in the 12 months through June, the largest gain since May 2014.

Imported-food prices dropped 2.6 percent last month, the biggest decrease since February 2012, after rising 0.4 percent in May.

The report also showed export prices increased 0.3 percent in June after advancing 0.6 percent in May. Prices for agricultural products fell 1.0 percent last month, pulled down by a 2.6 percent drop in soybean prices. Export prices for corn tumbled 3.1 percent.

Export prices increased 5.3 percent in the 12 months through June. That was the largest gain since October 2011 and followed a 4.9 percent rise in April.

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