US import prices unexpectedly fall in May

U.S. import prices import unexpectedly fell in May amid lower prices for energy products, providing another boost to the domestic inflation outlook.

Import prices dropped 0.4% last month after an unrevised 0.9% surge in April, the Labor Department's Bureau of Labor Statistics said on Friday. That was the first decline in import prices since December. Economists polled by Reuters had expected import prices, which exclude tariffs, to edge up 0.1%.

In the 12 months through May, import prices increased 1.1%, matching April's rise.

Data this week showed tame inflation readings in May as energy prices declined. The Federal Reserve on Wednesday kept its benchmark overnight interest rate in the current 5.25%-5.50% range, where it has been since last July.

U.S. central bank officials pushed out the start of rate cuts to perhaps as late as December, with policymakers projecting only a single quarter-percentage-point reduction for this year.

Economists and financial markets remain optimistic that the Fed will start its easing cycle in September and lower borrowing costs twice. The Fed has raised its policy rate by 525 basis points since March 2022.