US import prices posted their first decline in seven months in July, the Labor Department said on Friday, on lower costs for both fuel and nonfuel products.

Import prices fell by a more-than-expected 1.4% last month after rising 0.3% in June, the data showed. It was the largest monthly drop since April 2020. In the 12 months through July, import prices increased 8.8% after rising 10.7% in June.

Economists polled by Reuters had forecast import prices, which exclude tariffs, would decline 1.0% from June.

The report follows other tentative signs earlier this week that inflation has peaked, with US consumer prices unchanged in July due to a sharp drop in the cost of gasoline, after advancing 1.3% in June, although underlying price pressures remained elevated. Producer prices also declined last month on the back of lower energy costs.

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The Federal Reserve is mulling whether to raise its benchmark overnight lending rate by another 50 or 75 basis points at its next policy meeting on Sept. 20-21, as the US central bank battles to cool demand across the economy and bring inflation back down to its 2% goal. The Fed has raised its policy rate by 225 basis points since March.

Imported fuel prices dropped 7.5% last month after surging 6.2% in June. Petroleum prices declined 6.8%, while the cost of imported food fell 0.9%, the largest one-month drop since November 2020.

Excluding fuel and food, import prices dropped 0.5%. These so-called core import prices decreased 0.6% in June. They rose 3.8% on a year-on-year basis in July. The strength of the US dollar is helping keep a lid on core import prices.

US consumer price growth unchanged for July

The dollar has gained around 10% against the currencies of the United States’ main trade partners since the beginning of the year.

The report also showed export prices fell 3.3% in July after accelerating 0.7% in June. Prices for agricultural exports declined 3.0%, with the fall led by lower prices for soybeans, wheat and cotton.

Nonagricultural export prices fell 3.3%. Export prices rose 13.1% on a year-on-year basis in July after increasing 18.1% in June.