Import prices fell 1.4% last month after rising 0.3% in June, the data showed. In the 12 months through July, import prices increased 8.8% after rising 10.7% in June.
Economists polled by Reuters had forecast import prices, which exclude tariffs, would decline 1.0% from June.
The report follows tentative signs earlier this week that inflation had peaked, with U.S. consumer prices unchanged in July due to a sharp drop in the cost of gasoline, although underlying price pressures remained elevated. Producer prices also declined last month on the back of lower energy costs.
The Federal Reserve is mulling whether to raise its benchmark overnight lending rate by another 50 or 75 basis points at its next policy meeting on Sept. 20-21, as the U.S. central bank battles to cool demand across the economy and bring inflation back down to its 2% goal. The Fed has raised its policy rate by 225 basis points since March.
Imported fuel prices dropped 7.5% last month after surging 6.2% in June. Petroleum prices declined 6.8%, while the cost of imported food fell 0.9%, the largest one-month drop since November 2020.
Excluding fuel and food, import prices dropped 0.5%. These so-called core import prices decreased 0.6% in June. They rose 3.8% on a year-on-year basis in July. The strength of the U.S. dollar is helping keep a lid on core import prices.
The dollar has gained around 10% against the currencies of the United States' main trade partners since the beginning of the year.
The report also showed export prices fell 3.3% in July after accelerating 0.7% in June. Prices for agricultural exports declined 3.0%, with the fall led by lower prices for soybeans, wheat and cotton. Nonagricultural export prices fell 3.3%. Export prices rose 13.1% on a year-on-year basis in July after increasing 18.1% in June.
(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)
