U.S. import prices decline for first time in seven months

(Reuters) -U.S. import costs posted their first decline in seven months in July, helped by a robust U.S. greenback and on decrease prices for each gasoline and nonfuel merchandise in one other signal that inflation could have peaked.

Import costs fell by a more-than-expected 1.4% final month after rising 0.3% in June, the Labor Division mentioned on Friday. It was the biggest month-to-month drop since April 2020. Within the 12 months by way of July, import costs elevated 8.8% after rising 10.7% in June, the fourth straight month the annual charge has fallen.

Economists polled by Reuters had forecast import costs, which exclude tariffs, would decline 1.0% from June.

The report follows different tentative indications earlier this week that inflation has peaked, with U.S. shopper costs unchanged in July as a consequence of a pointy drop in the price of gasoline, after advancing 1.3% in June, though underlying value pressures remained elevated. Producer costs additionally declined final month on the again of decrease vitality prices.

“Declining import costs and producer costs assist the… thesis that the economic system is previous headline peak inflation,” mentioned Jeffrey Roach, chief economist at LPL Monetary.

The Federal Reserve is mulling whether or not to lift its benchmark in a single day lending charge by one other 50 or 75 foundation factors at its subsequent coverage assembly on Sept. 20-21, because the U.S. central financial institution battles to chill demand throughout the economic system and produce inflation again right down to its 2% objective. The Fed has raised its coverage charge by 225 foundation factors since March.

Imported gasoline costs dropped 7.5% final month after surging 6.2% in June. Petroleum costs declined 6.8%, whereas the price of imported meals fell 0.9%, the biggest one-month drop since November 2020 and third straight month of abatement.

Excluding gasoline and meals, import costs dropped 0.5%. These so-called core import costs decreased 0.6% in June. They rose 3.8% on a year-on-year foundation in July. The energy of the U.S. greenback helps maintain a lid on core import costs.

The greenback has gained round 10% in opposition to the currencies of the US’ essential commerce companions because the starting of the yr.

The report additionally confirmed export costs fell 3.3% in July after accelerating 0.7% in June. Costs for agricultural exports declined 3.0%, with the autumn led by decrease costs for soybeans, wheat and cotton.

Nonagricultural export costs fell 3.3%. Export costs rose 13.1% on a year-on-year foundation in July after rising 18.1% in June.

(Reporting by Lindsay Dunsmuir; Modifying by Paul Simao, Mark Heinrich and Mike Harrison)