US import prices slipped 0.3%, more than expected, in May

Shipping containers at the Port of Philadelphia.
Charles Mostoller | Bloomberg | Getty Images

Import prices dropped 0.3 percent in May, the steepest decline since the index dropped 0.5 percent in February 2016, the Labor Department reported Thursday.

U.S. import prices were expected to fall 0.1 percent for the month of May, after rising 0.5 percent a month earlier, according to a Thomson Reuters consensus estimate.

The decline this time around was driven by falling fuel prices, unlike last month when this wasn't an issue, the report said. Prices for fuel fell 3.7 percent in May, compared to a 0.3 percent drop in April.

The price index for U.S. imports climbed 2.1 percent overall for the 12 months ended in May.

Thursday's report additionally revealed prices for U.S. exports decreased an average of 0.7 percent in May from last month. Export prices were up 1.4 percent from one year ago.

The Labor Department's import-price index is one of several gauges the Federal Reserve uses to understand how quickly prices are rising in the U.S. On Wednesday, the Fed lifted its benchmark rate for the second time this year.

Import and export price data for June will be released on July 18, the Labor Department said.

Read the complete report from the Labor Department.

—CNBC's Lauren Thomas contributed to this report.