US import prices fall 0.4% as fuel costs ease in July

US import prices fell 0.4 percent in July, the largest monthly drop since May 2025, as lower fuel costs outweighed a 0.4 percent rise in nonfuel imports, Bureau of Labor Statistics data showed Tuesday. The decline came in below the 0.1 percent increase economists had projected, according to a Wall Street Journal survey.

"Lower prices for petroleum and petroleum products more than offset higher prices for natural gas," the BLS said. Fuel import prices fell 7.2 percent in July, the steepest monthly decline since September 2024, with petroleum and petroleum products down 7.5 percent while natural gas advanced 5.3 percent. Over the past year, fuel import prices increased 25.2 percent, with petroleum and petroleum products up 26.3 percent and natural gas up 74.3 percent.

Despite the monthly decline, import prices rose 5.9 percent from July 2025 to July 2026, with fuel prices up 25.2 percent over the year. Nonfuel import prices advanced 4.5 percent year over year, the largest annual gain since June 2022. Export prices fell 1.3 percent in July after a 0.7 percent drop in June, with nonagricultural exports down 1.5 percent while agricultural exports rose 1.0 percent. Agricultural export prices have not recorded a monthly decline since December 2025.

The data suggest falling energy costs are beginning to ease trade-related price pressures, though the strong annual gains indicate imported goods remain significantly more expensive than a year ago. With nonfuel import prices still climbing at their fastest annual pace in four years, the relief from lower fuel costs may be temporary — particularly if energy prices reverse course.

Nonfuel imports keep climbing

Nonfuel import prices rose 0.4 percent in July, driven by higher prices for capital goods, foods, feeds, and beverages, and automotive vehicles, parts, and engines. Import prices for foods, feeds, and beverages advanced 0.9 percent, while nonfuel industrial supplies and materials declined 0.5 percent. Capital goods import prices increased 0.9 percent, automotive vehicles, parts, and engines rose 0.2 percent, and consumer goods excluding automotives were unchanged.

The 4.5 percent year-over-year gain in nonfuel import prices marks the largest advance since June 2022, when pandemic-era supply-chain disruptions were still pushing goods prices higher. That persistence suggests the current easing is concentrated in energy rather than reflecting a broad disinflationary trend across imported goods.

Regional divergence in trade prices

Import prices from China advanced 0.8 percent in July, the largest monthly increase since July 2008, and rose 2.7 percent over the past year. Import prices from Japan increased 0.6 percent, while those from the European Union decreased 0.2 percent, Mexico fell 0.3 percent, and Canada dropped 2.1 percent, the first monthly decline since September 2025.

Export prices to China decreased 0.5 percent, to Japan increased 0.2 percent, to the European Union fell 1.9 percent, to Mexico rose 0.3 percent, and to Canada advanced 2.2 percent, the largest monthly gain since March 2022. The US terms of trade index with China decreased 1.3 percent in July, with Japan declined 0.3 percent, with the European Union fell 1.6 percent, with Canada increased 4.3 percent, and with Mexico rose 0.6 percent.

The divergence between falling fuel prices and still-elevated nonfuel costs carries implications for the Federal Reserve's inflation outlook. While cheaper energy imports could help cool headline inflation readings in coming months, the sustained 4.5 percent annual rise in nonfuel import prices suggests underlying goods inflation remains sticky. Import air passenger fares decreased 11.0 percent in July, while export air passenger fares ticked up 0.1 percent. Import air freight prices fell 2.2 percent, and export air freight prices decreased 1.5 percent.

This article is for informational purposes only and does not constitute investment advice.