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US import prices down 0.5% in Oct vs. 0.1% drop expected

A shipping container is loaded at the Port of Charleston, South Carolina.
Meghan Reeder | CNBC
A shipping container is loaded at the Port of Charleston, South Carolina.

U.S. import prices fell more than expected in October as the cost of petroleum and a range of goods declined, a sign that a strong dollar and soft global demand continued to exert downward pressure on imported inflation.

The Labor Department said on Tuesday import prices dropped 0.5 percent last month after a revised 0.6 percent decline in September. Import prices have now fallen in 14 of the last 16 months.

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Economists had forecast import prices slipping 0.1 percent after a previously reported 0.1 percent fall in September.

In the 12 months through October, prices tumbled 10.5 percent. Dollar strength and a sharp decline in oil prices have weighed on inflation, which is persistently running below the Federal Reserve's 2 percent target.

Weak inflation pressures, however, are unlikely to deter the U.S. central bank from raising interest rates next month after job growth surged in October and the unemployment rate fell to a 7-1/2-year low of 5.0 percent. A tightening labor market could give Fed officials confidence that inflation will gradually move toward its target.

Last month, imported petroleum prices fell 2.1 percent after declining 6.0 percent in September.

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Import prices excluding petroleum dropped 0.4 percent, the largest decrease since January. That reflected the impact of the dollar's 16.6 percent rise against the currencies of the United States' main trading partners since June 2014. Import prices excluding petroleum fell 0.2 percent in September.

In October, imported food prices dropped 1.0 percent, also the largest decline since January, after falling 0.7 percent in September. Industrial supplies prices fell 1.4 percent after declining 2.9 percent in September.

Prices for imported capital goods fell 0.1 percent, while prices for imported automobiles dropped 0.3 percent, the biggest fall since February.

The report also showed export prices slipped 0.2 percent after falling 0.6 percent in September. They were down 6.7 percent in the 12 months through October.