U.S. import prices fall further in October

U.S. import prices dropped for a fourth straight month in October, weighed down by declining costs for petroleum products and a strong dollar, the latest indication that inflation had probably peaked.

Import prices fell 0.2% last month after decreasing 1.1% in September, the Labor Department said on Wednesday. In the 12 months through October, import prices increased 4.2%, the smallest rise since February 2021, after climbing 6.0% in September. Economists poll had forecast import prices, which exclude tariffs, falling 0.4% month-on-month.

Government data this month showed consumer and producer prices increasing less than expected in October, fueling financial market expectations that the Federal Reserve would dial back its aggressive interest rates increase in December.

The U.S. central bank has raised its policy rate by 375 basis points this year from near zero to a 3.75%-4.00% range as it battles rampant inflation in what has become the fastest rate hiking cycle since the 1980s.

Falling import prices also pointed to an easing of snarled global supply chains, which was reflected in weak readings in underlying consumer and producer goods prices in October.

Imported fuel prices fell 1.3% last month after decreasing 7.0% in September. Petroleum prices dropped 1.2%, while the cost of imported food decreased 0.8%.

Excluding fuel and food, import prices dipped 0.1%. These so-called core import prices fell 0.4% in September. They increased 2.8% on a year-on-year basis in October. Dollar strength is helping to limit the increase in core import prices.

The dollar has gained 8.3% against the currencies of the United States’ main trade partners since January.

The report also showed export prices slipped 0.3% in October after dropping 1.5% in September.

Prices for agricultural exports declined 1.0%, led by a 6.6% drop in soybean prices, offsetting higher prices for wheat, fruit and vegetables. Nonagricultural export prices fell 0.3%. Export prices increased 6.9% year-on-year in October after rising 9.2% in September.