U.S. import prices unexpectedly fell in July for the fourth straight month as costs declined for imported oil, industrial supplies and even many consumer goods, further icing inflation pressures.
Overall import prices dropped 0.6% last month, the U.S. Labor Department said on Friday.
Import prices have only risen once in the last eight months.
Analysts had expected import prices would rise 0.1% in July, and the decline could give the U.S. Federal Reserve more scope to ease monetary policy if policymakers think the economy needs it.
Still, an increase in the pace of hiring in July has led some economists to think the Fed might not be ready for a new round of bond purchases, a monetary easing strategy known as quantitative easing.
Despite the downward trend in prices, analysts pointed out that much of the decline has been due to a drop in the cost of oil.
Prices fell for goods and services bought from most of America's major trading partners, including China, Mexico and the European Union. That could be a sign of the recent cooling in the global economy, which has been largely caused by Europe's debt crisis.
U.S. stock index futures fell, hurt by trade and new bank lending data in China that suggested pro-growth policies have been slow to gain traction and more urgent action may be needed to stabilize the economy. Yields on U.S. government debt also slipped.
Prices of Chinese imports dropped 0.2% in July.
The Fed targets annual inflation of 2%, and policymakers' preferred measure of inflation showed prices up 1.5% in June from a year earlier.
Prices for imported petroleum slipped by 1.6% in July. Stripping out fuels and food, import prices were down 0.4%
Many prices for consumer goods fell. Excluding autos, prices for consumer goods were down 0.1%.
The U.S. Labor Department report also showed export prices rose 0.5% last month. Analysts had expected export prices to be flat.
A rise in the price of agricultural goods fueled the increase in export prices, pointing to the impact of the severe drought in the farm belt region of the country. Stripping out agriculture, export prices fell 0.3%.
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