The cost of imported goods fell in August for the first time in 10 months, perhaps another sign that inflation is starting to cool after a big runup earlier this year.
The import price index dropped 0.3% last month, the government said Wednesday. Economists polled by The Wall Street Journal had forecast a 0.3% increase.
The cost of foreign-produced fuel slid 2.3% last month and accounted for most of the drop in import prices. It was the first decline in almost a year.
Excluding fuel, import prices fell a smaller 0.1% last month.
Import prices have risen 9% in the past year, but the increase has slowed for three months in a row.
Economists say the the rising value of the U.S. dollar has played a pivotal role. A weaker dollar early in the pandemic fed the increase in import prices while a stronger dollar is now doing the opposite. A stronger dollar makes imports cheaper for Americans to buy.
Whatever the case, the report adds another quiver to the Federal Reserve’s argument that the biggest surge in U.S. inflation in decades is the temporary result of the economy reopening.
The pandemic has upset long-established patterns in the global trading system, the argument goes, and caused prices of all sorts of supplies ranging from lumber to computer chips to surge. These price hikes will fade, the Fed contends, once the U.S. and global economies return to normal.
Along with the decline in fuel prices, the cost of building materials also fell last month.
Yet the cost of many other imports rose. Prices increased for food, drinks, new cars, computers and a broad array of retail goods. These price increases suggest American consumers won’t get much relief from higher prices anytime soon.
U.S. export prices, meanwhile, rose 0.4% in August. They are up almost 17% in the past year.