Reflecting a sharp pullback in prices for fuel imports, the Labor Department released a report on Friday showing U.S. import prices fell by more than expected in the month of July.
The Labor Department said import prices slumped by 1.4 percent in July after rising by an upwardly revised 0.3 percent in June. The decrease reflected the first drop in import prices since December 2021.
Economists had expected import prices to decline by 1.0 percent compared to the 0.2 percent uptick originally reported for the previous month.
The bigger than expected decrease in import prices came as prices for fuel imports plunged by 7.5 percent in July after surging by 6.2 percent in June.
Lower prices for petroleum and natural gas contributed to steep drop in fuel import prices, which marked the first decline since December 2021.
The report showed prices for non-fuel imports also fell by 0.5 percent in July after sliding by 0.6 percent in June.
Lower prices for non-fuel industrial supplies and materials and foods, feeds, and beverages more than offset higher prices for automotive vehicles and capital goods.
The annual rate of growth in import prices decelerated to 8.8 percent in July from 10.7 percent in June, reflecting the slowest growth since March 2021.
“With a synchronized slowdown in global growth factoring into lower oil prices, we expect import price inflation to remain on a gradual downtrend through the end of the year, barring any unforeseen supply shocks,” said Mahir Rasheed, US Economist at Oxford Economics.
He added, “Rising interest rates and a more modest growth path for the economy will also support slower growth in import prices, especially as domestic demand eases and falls into a healthier balance with supply.”
The Labor Department also said export prices plummeted by 3.3 percent in July after climbing by 0.7 percent in June. Export prices were expected to decrease by 1.1 percent.
The nosedive by export prices came as prices for agricultural exports and non-agricultural exports tumbled by 3.0 percent and 3.3 percent, respectively.
Compared to the same month a year ago, export prices were up by 13.1 percent in July compared to the 18.1 percent spike in June. The year-over-year increase was the smallest since March 2021.
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