WASHINGTON: U.S. import prices fell in February as a decline in the cost of fuels offset increases in food, capital and consumer goods, resulting in the first annual decline since 2020.

Import prices slipped 0.1% last month after decreasing 0.4% in January, the Labor Department said on Thursday. Economists polled by Reuters had forecast import prices, which exclude tariffs, falling 0.2%.

In the 12 months through February, import prices dropped 1.1%. That was the first decline since December 2020. Imported fuel prices fell 4.9%, matching January’s drop. Petroleum prices rose 1.5%, while natural gas prices plunged 55.6%.

The cost of imported food rose 1.3%. Excluding fuel and food, import prices increased 0.3%. These so-called core import prices gained 0.1% in January. The rise in core import prices likely reflects the recent depreciation of the dollar against the currencies of the United States’ main trade partners.

Prices for imported capital goods rose 0.3%, while the cost of consumer goods excluding motor vehicles jumped 0.5%.

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Though price pressures are subsiding, they remain too strong to bring inflation back to the Federal Reserve’s 2% target. Data this week showed monthly consumer prices rising strongly in February, but producer prices unexpectedly fell last month.

Financial markets have wavered between the Fed hiking rates by a quarter-point and pausing its monetary policy tightening campaign when policymakers meet next Tuesday and Wednesday, according to CME Group’s FedWatch tool.

The U.S. central bank has raised its benchmark overnight interest rate by 450 basis points since last March from near-zero to the current 4.50%-4.75% range.