WASHINGTON: US import prices increased less than expected in June, likely as a strong dollar helped to curb gains in the costs of goods excluding petroleum products, offering some hopeful sign for an economy struggling with soaring inflation.
Import prices rose 0.2% last month after climbing 0.5% in May, the Labor Department said on Friday. In the 12 months through June, import prices increased 10.7% after advancing 11.6% in May. Economists polled by Reuters had forecast import prices, which exclude tariffs, gaining 0.7% month-on-month.
The report followed on the heels of data this week showing annual consumer prices shot up 9.1% in June, the largest increase since November 1981, as the cost of gasoline soared to record highs. Producer prices also accelerated last month.
US retail sales in June boosted by gasoline, automobiles
The hot inflation readings made it certain that the Federal Reserve would deliver another 75-basis-points interest rate increase at the end of this month. The US central bank has hiked its policy rate by 150 basis points since March.
But there are hopeful signs that inflation could peak soon. Crude oil prices have fallen sharply, with the global benchmark Brent trading below $100 per barrel after surging to $139 in March, which was close to the all-time high reached in 2008. Other commodity prices are also coming off the boil.
Imported fuel prices increased 5.7% last month after surging 6.5% in May. Petroleum prices gained 5.0%, while the cost of imported food declined 0.7%.
Excluding fuel and food, import prices fell 0.5%. These so-called core import prices decreased 0.3% in May. They climbed 4.4% on a year-on-year basis in June. Dollar strength is helping to limit the increase in core import prices.
The dollar has gained 6.3% against the currencies of the United States’ main trade partners since January.
The report also showed export prices rose 0.7% in June after increasing accelerating 2.9% in May. Prices for agricultural exports fell 0.3%. Nonagricultural export prices increased 0.9%. Export prices rose 18.2% year-on-year in June after increasing 18.7% in May.