The United States import prices fell for the first time in seven months in July, helped by a strong US dollar and lower costs for both fuel and nonfuel products. This is yet another indication that inflation may have reached its maximum level.
Following a 0.3% month-over-month increase in June, the Labor Department said on Friday that import prices dropped by a greater-than-expected 1.4% in July.
It was the biggest monthly loss seen since April of the following year. Following a month in which they increased by 10.7%, import prices increased 8.8% in the 12 months leading up to July. This was the fourth consecutive month in which the annual rate decreased.
Import prices, which do not include the impact of tariffs, were projected to fall by 1.0% month-over-month by economists polled by Reuters.
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After increasing by 1.3% 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. Because of the decrease in the cost of energy, producer prices fell as well during the previous month.
According to Jeffrey Roach, chief economist at LPL Financial, declining import costs and producer prices reinforce the idea that the economy is past the point where headline inflation is at its height.
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 as the Fed attempts to bring inflation back down to its target level of 2%. Since March, the Federal Reserve has implemented a 225-point increase in its policy rate.
After climbing by 6.2% in June, the cost of imported petroleum had a 7.5% decrease in July. The price of imported food fell by 0.9%, marking the largest one-month drop in cost since November 2020, while the price of imported petroleum fell by 6.8%. This marks the third consecutive month of declining prices.
The cost of imported goods fell by 0.5% when fuel and food were taken out of the equation. The so-called core pricing of imports went down by 0.6% in June.
In July, they increased by 3.8% when compared to the same month the previous year. The strength of the United States dollar is assisting in maintaining a ceiling on the pricing of essential imports.
Since the beginning of the year, the value of the dollar has increased by almost 10% in comparison to the currencies of the United States’ most important trading partners.
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The survey also revealed that the prices of goods being exported decreased by 3.3% in July after having increased by 0.7% in June.
The decrease in prices for agricultural exports was 3.0%, with lower prices for soybeans, wheat, and cotton being the primary contributors to the downturn.
Nonagricultural export prices declined 3.3%. After posting a year-over-year increase of 18.1% in June, export prices continued their upward trend in July, posting a 13.1% gain.
