US import prices extend decline on cheaper oil

Shipping containers onboard a cargo ship at the Port of Charleston, South Carolina.
Meghan Reeder | CNBC

U.S. import prices fell in November as the cost of petroleum and several goods continued to decline, suggesting that cheaper crude oil and a strong dollar will keep imported inflation pressures subdued for a while.

The Labor Department said on Thursday import prices dropped 0.4 percent last month after a revised 0.3 percent decrease in October. Import prices have declined in 15 of the last 17 months. Economists had forecast import prices falling 0.7 percent after a previously reported 0.5 percent drop in October.

In the 12 months through November, prices tumbled 9.4 percent. Dollar strength and a sharp decline in oil prices have dampened inflation, leaving it running well below the Federal Reserve's 2 percent target.

But given tightening labor market conditions, tame price pressures are unlikely to prevent the Fed from raising interest rates next week for the first time in nearly a decade. Labor market tightness is expected to spur faster wage growth and gradually push inflation toward its target.

Last month, imported petroleum prices fell 2.5 percent after rising 0.4 percent in October. Further weakness is likely following a recent slump in oil prices to seven-year lows.

Import prices excluding petroleum slipped 0.3 percent after falling 0.4 percent in October. The dollar has gained 18 percent against the currencies of the United States' main trading partners since June 2014, making imports less expensive.

In November, imported food prices fell 0.5 percent, declining for a third straight month. Prices for industrial supplies, excluding petroleum fell 1.0 percent after a similar drop in October.

Prices for imported capital goods dipped 0.1 percent and prices for imported automobiles also fell by the same margin.

The report also showed export prices decreased 0.6 percent last month after slipping 0.2 percent in October. They were down 6.3 percent in the 12 months through November.