US import prices post biggest gain in more than eight years

WASHINGTON: US import prices increased by the most in more than eight years in June amid a surge in the cost of fuel, but the overall trend remained weak, suggesting inflation could stay tame despite a jump in consumer prices last month.

Still, the report from the Labor Department on Wednesday further diminished fears that the economy was in danger of deflation, a decline in the general price level, which is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices. Import prices accelerated 1.4% last month, the largest increase since March 2012, after rising 0.8% in May.

Economists polled by Reuters had forecast import prices, which exclude tariffs, gaining 1.0% in June.

In the 12 months through June, import prices fell 3.8% after dropping 6.2% in May.

The report followed on the heels of data on Tuesday showing consumer prices increased by the most in nearly eight years in June. The economy slipped into recession in February.

Activity has improved as businesses reopened after shuttering in mid-March to slow to spread of COVID-19. But new cases of the respiratory illness have surged in the South and West, prompting some authorities in these regions to either shut businesses again or pause reopenings.

US financial markets were little moved by the import prices data.

In June, prices for imported fuels and lubricants soared 21.9% after increasing 15.4% in May. Petroleum prices jumped 23% after advancing 16.1% in May. Imported food prices dipped 0.1% last month.

Excluding fuels and food, import prices rebounded 0.3% after slipping 0.1% in May. The rise in the so-called core import prices last month likely reflects weakness in the dollar in late May and early June against the currencies of the United States' main trade partners.

But with the trade-weighted exchange rate moving higher, underlying imported inflation is likely to be subdued.

The so-called core import prices fell 0.3% in the 12 months through June. The cost of goods imported from China gained 0.1% last month, the first increase since December 2019. Prices dropped 0.9% year-on-year in June.

The report also showed export prices increased 1.4% in June, the largest rise since March 2011, boosted by gains in prices for both nonagricultural and agricultural goods. That followed a 0.4% rise in May. Export prices fell 4.4% on a year-on-year basis in June after declining 6.2% in May.