U.S. inflation outlook brightens as import prices drop, consumer sentiment rises

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The report followed other tentative indications earlier this week that inflation was finally coming off the boil as gasoline prices and energy costs fell.

A person puts gas in a vehicle at a gas station in Manhattan, New York City, U.S., August 11, 2022. REUTERS/Andrew Kelly/File PhotoAug 12 - U.S. import prices fell for the first time in seven months in July, helped by a strong dollar and lower fuel and nonfuel costs, while consumers' one-year inflation outlook ebbed in August, the latest signs that price pressures may have peaked.

"Declining import prices and producer prices support the ... thesis that the economy is past headline peak inflation," said Jeffrey Roach, chief economist at LPL Financial.The Federal Reserve is mulling whether to raise its benchmark overnight lending rate by 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.

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 and third straight monthly decline. 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.

 

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