The recent from the labor department reveals that the US import prices decreased during February. The drop was due to the decline in the cost of capital goods, consumer goods, and food. This increase in the import prices is the first ever decline of the last 2 years.
According to the data, a drop of 0.1% was seen in import prices during February against a drop of 0.4% two months ago. According to a poll of economists, a 0.2% drop in import prices was expected.
Price Pressure Is Cooling Down
From February of last year to this February this year, the import prices have gone down by 1.1%. This makes it the first-ever decline in the last 2 years.
Overall, imported fuel prices have gone down by 4.9%, which is what we saw during January. In addition, a 1.5% increase was seen in petroleum prices, while the prices of natural gas dropped by 55.6%.
During the same period of time, the imported food cost increased by 1.3%. And if we exclude the food and feel from import prices, the increase is 0.3%.
However, the prices of core import items increased, which is mainly due to the dollar depreciation against other currencies.
The imported capital goods price also increased by 0.3% and the consumer goods cost (not including cars) jumped by 0.5%.
It appears that the price pressure in the USA is now subsiding but it is still strong enough to keep the inflation above the Fed's 2.0% target.
Considering how the USA imports a lot of items, the recent drop in import prices is a healthy trend. At least, it would help the average US consumers who are dealing with a decade's high inflation with very little to no wage growth.
However, experts believe that it wouldn't stop the Fed from raising interest rates. After all, the inflation in US is still running wild and is way higher than the 2% target.