US import prices post second monthly drop

WASHINGTON (REUTERS) - US import prices fell for a second straight month in June amid further declines in the cost of petroleum products, suggesting inflation pressures could remain benign for a while.

The Labor Department said on Tuesday (July 18) that import prices decreased 0.2 per cent last month after an upwardly revised 0.1 per cent decline in May.

Economists polled by Reuters had forecast import prices slipping 0.2 per cent in June after a previously reported 0.3 per cent drop in May.

In the 12 months through June, import prices increased 1.5 per cent. That was the smallest gain since last November and followed May's 2.3 per cent increase. The year-on-year increase in import prices has slowed sharply since posting 4.7 per cent in February, which was the biggest advance in five years.

The report came on the heels of data last week showing consumer prices were unchanged in June and the annual CPI rate increasing 1.6 per cent - the smallest rise since October 2016.

Low oil prices are largely curbing both domestic and imported inflation pressures. Other factors such as declining prices for mobile phone services have also contributed to pushing inflation below the Federal Reserve's 2 per cent target.

Persistently low inflation is expected to have an impact on the timing of a third interest rate increase this year from the US central bank, which most economists expect would be in December.

Last month, prices for imported petroleum fell 2.2 per cent after decreasing 1.2 per cent in May. Imported petroleum prices have not risen since gaining 0.8 per cent in February.

Import prices excluding petroleum edged up 0.1 per cent after being unchanged the prior month. Import prices excluding petroleum increased 1.4 per cent in the 12 months through June.

Prices for imported capital goods rose 0.2 per cent, the largest increase since May 2014. Imported motor vehicle prices fell 0.2 per cent, while the cost of imported food increased 0.9 per cent.

The report also showed export prices fell 0.2 per cent in June, pushed lower by decreasing agricultural prices, after dropping 0.5 per cent in May. They rose 0.6 per cent year-on-year after gaining 1.5 per cent in May.