May Import Prices Drop 0.6%; Export Prices Fall 0.5%

WASHINGTON — U.S. import prices fell by 0.6% in May, led by the continued sharp drop in fuel prices and a 0.3% decline in the nonfuel categories, the Bureau of Labor Statistics reported Thursday.

Fuel prices fell 1.9%, with petroleum import prices down 2.0%, but natural gas prices up 2.0%.

Excluding both food and fuels, import prices fell 0.4% in May following a 0.2% decline in April.

The decline in non-fuel import prices reflected lower import prices for every category except capital goods, where there was no change. In particular, import prices for consumer goods excluding automotives fell 0.3% in May, the largest monthly drop since November 2010 (a 0.5% decline).

Food prices fell 0.4%, non-fuel industrial goods prices fell 1.4% - the largest decline since July last year, and automotive vehicles and parts prices fell 0.2%.

Import prices fell across all the major trading partners except Mexico (up 0.1%), with prices from China down 0.2%, from the EU down 0.1%, from Canada down 0.9%, and from Japan down 0.4%. The BLS said that over the past 12 months, the prices of imports from Japan have declined by 1.4%, the largest 12-month drop since November 2006 (a 1.5% decrease).

Total import prices were down 1.9% over the last 12 months, a slower rate of decline compared to the 2.7% year/year drop reported in April. Non-fuel import prices were down 1.1%, the largest 12-month decline since November 2009 and an indication of the extent of import price deflation outside of energy goods.

Total export prices fell 0.5% in May, while agricultural export prices rose 1.0% and export prices excluding agriculture were down 0.7%. As with imports, the declines were widespread across the nonagricultural components.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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