As energy costs continue to tumble, import prices dropped 0.9 percent in August. A strengthening U.S. dollar combined with soft global demand should continue to weigh on import price inflation in the coming months.
Energy Remains Near-term Driver
- For the second-straight month import prices fell in August, lowering the year-over-year pace to -0.4 percent from a 0.8 percent pace in July. Once again, a substantial decline in petroleum costs, down 4.4 percent, weighed on the headline.
- Outside of energy, import inflation has been nonexistent as prices of both imported consumer goods and imported capital goods have remained unchanged over the past three months
Stronger Dollar Exerts Drag on Prices
- By region, prices for imported products from Canada, China, Latin America, Mexico and the United Kingdom fell on the month. Prices from Japan were flat, while prices of imported products from the European Union edged up 0.1 percent.
- A strengthening U.S. dollar and sluggish growth overseas are keeping import price inflation in check and present little risk to the overall U.S. inflation outlook.
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