U.S. import prices post first decline in 10 months

A container filled with soybeans is lifted by a crane onto a ship in celebration of The Port of Los Angeles becoming the first port in the Western Hemisphere to process 10 million container units in a 12-month period, June 10, 2021.

Brittany Murray | MediaNews Group | Long Beach Press-Telegram via Getty Images

U.S. import prices fell for the first time in 10 months in August amid a decline in the costs of petroleum products, further evidence that inflation had probably peaked.

Import prices dropped 0.3% last month after increasing 0.4% in July, the Labor Department said on Wednesday. The first decrease since October 2020 lowered the year-on-year increase to 9.0% from 10.3% in July. Economists polled by Reuters had forecast import prices, which exclude tariffs, climbing 0.3%.

The report followed on the heels of news on Tuesday that consumer prices recorded their smallest gain in seven months in August. Federal Reserve Chair Jerome Powell has steadfastly maintained that high inflation is transitory.

The run-up in prices centered on used cars and trucks, as well as services in industries worst affected by the COVID-19 pandemic, is slowing. But strained supply chains will likely keep inflation elevated for a while.

Imported fuel prices tumbled 2.3% last month after increasing 3.0% in July. Petroleum prices dropped 2.4%, while the cost of imported food rose 0.6%.

Excluding fuel and food, import prices fell 0.2%. These so-called core import prices gained 0.1% in July. There were marginal increases in the prices of imported capital goods and consumer goods, excluding automobiles.

Prices for imported motor vehicles, parts and engines rose 0.3% after increasing 0.4% in July. The cost of goods imported from China gained 0.4% after rising 0.6% in July.

The report also showed export prices climbed 0.4% in August, the smallest gain since October 2020, after shooting up 1.1% in July. Prices for agricultural exports rebounded 1.1%. That followed a 1.7% decrease in July. Export prices rose 16.8% year-on-year in August after jumping 17.0% in July.

There were increases in the prices of nuts, wheat, meat, vegetables, and dairy products, which offset lower prices for corn, animal feeds, fruit, and soybeans. Agricultural export prices advanced 33.4% over the past year.

Nonagricultural export prices gained 0.2% after accelerating 1.4% in the prior month. There were gains in the prices of industrial supplies and materials, capital goods, motor vehicles and nonagricultural foods, which offset weak consumer goods prices. Nonagricultural export prices increased 14.9% from a year ago.