U.S. Import Prices Decrease 0.6% May, Much More Than Expected

Import prices in the U.S. fell by much more than expected in the month of May, according to a report released by the Labor Department on Thursday.

The Labor Department said import prices slid by 0.6 percent in May after rising by a downwardly revised 0.3 percent in April.

Economists had expected import prices to edge down by 0.1 percent compared to the 0.4 percent increase originally reported for the previous month.

The bigger than expected decrease in import prices reflected a sharp pullback in prices for fuel imports, which plummeted by 6.4 percent in May after soaring by 4.1 percent in April.

Prices for non-fuel imports edged down by 0.1 percent in May after coming in unchanged in the previous month, as lower prices non-fuel industrial supplies and materials and foods, feeds, and beverages more than offset higher prices for automotive vehicles and capital goods.

The report said import prices in May were down by 5.9 percent compared to the same month a year ago, reflecting the largest year-over-year drop since May 2020.

“Import prices have fallen in every month of this year except April,” said Matthew Martin, U.S. Economist at Oxford Economics. “Fuel prices continue to carry the bulk of the declines, but nonfuel prices are weakening, and this is a good sign for core consumer prices.”

“Lower import prices will support goods disinflation, with producers reaping the benefits,” he added. “A hawkish fed, softening domestic demand, and a strong US dollar, which effects import prices will a lag, will limit gains over the next few months.”

Meanwhile, the Labor Department said export prices plunged by 1.9 percent in May after a revised 0.1 percent dip in April.

Export prices were expected to come in unchanged compared to the 0.2 percent uptick originally reported for the previous month.

The unexpected slump reflected steep drops in prices for both agricultural and non-agricultural exports, which tumbled by 2.1 percent and 1.8 percent, respectively.

Export prices in May were down by 10.1 percent compared to the same month a year ago, reflecting the largest decline since the 12-month percent change series was first published in September 1984.

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