The numbers: The cost of imported goods fell in August for the second month in a row, offering Americans some relief from high inflation.
Import prices sank 1% last month following a 1.5% decline in July, marking the first back-to-back drops since the first two months of the pandemic in early 2020.
Economists polled by The Wall Street Journal had estimated a 1.2% decrease.
Falling oil prices played a chief role in the summer decline. Yet if fuel is excluded, import prices have retreated for four months in a row for the first time since mid-2019.
A big reason why import prices are falling is because of the rising value of the U.S. dollar. A strong dollar allows Americans to buy foreign products at lower prices than they previously had been paying.
The result: The U.S. is basically importing deflation and offering consumers some respite from higher prices.
Big picture:Lower oil prices are letting Americans keep more of their money. Gas prices soared earlier in the year and robbed consumers of a good chunk of their disposable income.
Cheaper gas isn’t doing much to reduce inflation, however, and rising interest rates are set to pummel households and businesses.
The U.S. could tip into recession by next year, economists say, if the Federal Reserve has to keep raising rates to try to snuff out the worst inflation in 40 years.
Key details: If fuel is set aside, import prices slipped 0.2% last month. The last time they rose was in April.
The cost of imported food, industrial supplies and autos all declined last month. Price rose for consumer goods.
The increase in import prices over the past year slowed to 10.8% from 12.9% in the prior month and a recent peak of 18.6% in May.
Export prices sank 1.6% in August.
That’s a sign the strong dollar is discouraging foreign customers from buying American-made goods since they are more expensive. Foreign economies have also gotten weaker, especially in Europe.
Prices for exports are still up 10.8% in the past year, however.
Looking ahead: “While yesterday’s [producer price index] report and today’s import prices are encouraging, they are not enough to offset the broad-based CPI report earlier in the week,” U.S. economist Matthew Martin of Oxford Economics wrote in a note to clients.