The United States import prices fell for the first time in seven months in July, supported by a strong US currency and lower costs for both fuel and nonfuel imports. This is another indication that inflation may have reached its maximum level.
According to data released by the Labor Department on Friday, import prices dropped by 1.4% in July, which was a larger percentage than the predicted drop of 0.3% seen in June.
It was the greatest monthly loss ever seen, dating back to April of 2020. After increasing by 10.7% in June, import prices grew 8.8% in the 12 months leading up to July.
This marks the fourth month in a row that the annual rate has decreased.
Reuters’ survey of economic experts’ predictions indicated that import prices, excluding the impact of tariffs, were expected to fall by 1.0% from June levels.
After a 1.3% increase in June, consumer prices in the United States remained unchanged in July due to a sharp drop in the cost of gasoline, even though underlying price pressures remained elevated.
This report comes on the heels of other tentative indications that inflation may have reached its peak earlier this week. As a result of declining energy prices, producer prices also fell over the previous month.
According to Jeffrey Roach, chief economist at LPL Financial, declining import prices and producer prices provide support for the hypothesis that the economy has moved past the point of headline peak inflation.
As the U.S. central bank strives to reduce demand across the economy and bring inflation back down to its target level of 2%, the Federal Reserve is contemplating whether to raise its benchmark overnight lending rate by another 50 or 75 basis points at its next policy meeting on September 20-21.
The meeting will take place amid a battle between the Fed and inflation. Since March, the Federal Reserve has implemented an increase in its policy rate of 225 basis points.
After an increase of 6.2% in June, the cost of imported petroleum decreased by 7.5% in July. The price of crude oil went down by 6.8 per cent, and the cost of food that is imported went down by 0.9 per cent; this is the highest one-month drop seen since November 2020, and it is the third month in a row that prices have been going down.
Read more:-
- Our Employers Struggle to Find Enough Workers Despite Posting “Now Hiring”
- Wall Street Investors Are Relieved by Expectations of a Soft Landing for the Us Economy.
- China and Us Decoupling Breaks Out
Taking out the cost of fuel and food, import prices fell by 0.5%. In June, the so-called core prices of imports experienced a reduction of 0.6%. In July, they increased on a year-over-year basis by 3.8%.
The strength of the United States dollar is one factor that is helping to keep a lid on core import prices.
Since the beginning of the year, the value of the dollar has increased against the currencies of the United States’ primary trading partners by around 10%.
According to another finding in the research, prices of exports dropped by 3.3% in July after having increased by 0.7% in June.
The price decrease for agricultural exports was 3.0%, with lower prices for soybeans, wheat, and cotton leading the slide.
Nonagricultural export prices declined 3.3%. After recording a year-over-year increase of 18.1% in June, export prices increased by 13.1% in July.
