WASHINGTON (Reuters) - U.S. import prices recorded their biggest drop in more than 1-1/2 years in August amid declines in the cost of fuels and a range of other goods, suggesting a strong dollar was curbing imported inflation pressures.
The Labor Department said on Friday import prices fell 0.6 percent last month. That was the largest decline since January 2016 and followed a downwardly revised 0.1 percent dip in July.
Import prices were previously reported to have been unchanged in July. Economists polled by Reuters had forecast import prices falling 0.2 percent in August.
In the 12 months through August, import prices rose 3.7 percent, slowing after surging 4.9 percent in July.
Last month, prices for imported fuels and lubricants fell 3.9 percent, the biggest drop since February 2016, after rising 1.0 percent in July. Food prices rose 0.4 percent in August after tumbling 1.6 percent in the prior month.
Excluding fuels and food, import prices fell 0.2 percent last month after slipping 0.1 percent in July.
The so-called core import prices advanced 1.3 percent in the 12 months through August. The monthly decline in core import prices likely reflects the strong dollar, which has gained more than six percent this year against the currencies of the United States' main trade partners.
Dollar strength is expected to offset some of the anticipated increase in prices, especially if the Trump administration presses ahead with tariffs on nearly all Chinese imports. Washington has already slapped duties on $50 billion worth of Chinese imports, provoking retaliation from Beijing.
The import price data excludes duties. In August, import prices for nonfuel industrial supplies and materials dropped 0.8 percent after falling 1.1 percent in July. The cost of imported capital goods dipped 0.1 percent.
Imported motor vehicle prices were unchanged in August for a second straight month. The cost of consumer goods excluding automobiles was also unchanged after rising 0.3 percent in July.
Prices for goods imported from China slipped 0.1 percent in August for a second straight month. Prices for Chinese imports gained 0.2 percent in the 12 months through August.
The report also showed export prices fell 0.1 percent in August after declining 0.5 percent in July. Prices for agricultural products rose 0.2 percent last month, lifted by increases in soybean, wheat and corn prices.
Export prices increased 3.6 percent on a year-on-year basis in August after rising 4.3 percent in July.