With fuel prices showing a substantial decrease in the month of June, the Labor Department released a report on Thursday showing a much bigger than expected drop in import prices for the month.
The report showed that import prices tumbled by 2.7 percent in June following a revised 1.2 percent drop in May. Economists had expected prices to fall by 1.9 percent compared to the 1.0 percent decrease originally reported for the previous month.
The steeper than expected drop in import prices marked the biggest monthly drop since a 4.6 percent decrease in December of 2008.
Import prices were dragged down by a sharp drop in prices for fuel imports, which tumbled by 10.1 percent in June after falling by 4.6 percent in May.
The drop in fuel import prices, which was the steepest drop since December of 2008, came as a 10.5 percent decrease in petroleum prices more than offset a 7.4 percent increase in natural gas prices.
Excluding the sharp drop in fuel prices, import prices edged down by a much more modest 0.3 percent in June compared to a 0.1 percent decrease in May. The Labor Department noted that each of the major end use categories recorded declines in June.
Export prices also showed a notable decrease, falling by 1.7 percent in June after sliding by 0.4 percent in May. The drop far exceeded economist estimates for a decrease of about 0.2 percent.
The much bigger than expected drop in export prices marked the steepest drop since a 2.0 percent decrease in October of 2011.
A 4.0 percent drop in prices for agricultural exports contributed to the drop in export prices, with the decrease reflecting notable drops in prices for soybeans, corn, and cotton.
However, the report showed that export prices still fell by 1.4 percent in June excluding the drop in prices for agricultural exports.
The Labor Department said lower prices for non-agricultural industrial supplies and materials, capital goods, and automotive vehicles more than offset rising consumer goods prices.
Compared to the same month a year ago, import prices were down by 2.6 percent in June, while export prices were down by 2.1 percent.
by RTT Staff Writer
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