US import prices post second monthly drop

U.S. import prices fell for a second straight month in June amid further declines in the cost of petroleum products, suggesting inflation pressures could remain benign for a while.

The Labor Department said on Tuesday that import prices decreased 0.2 percent last month after an upwardly revised 0.1 percent decline in May.

Economists polled by Reuters had forecast import prices slipping 0.2 percent in June after a previously reported 0.3 percent drop in May.

In the 12 months through June, import prices increased 1.5 percent. That was the smallest gain since last November and followed May's 2.3 percent increase. The year-on-year increase in import prices has slowed sharply since posting 4.7 percent in February, which was the biggest advance in five years.

The report came on the heels of data last week showing consumer prices were unchanged in June and the annual CPI rate increasing 1.6 percent - the smallest rise since October 2016.

Low oil prices are largely curbing both domestic and imported inflation pressures. Other factors such as declining prices for mobile phone services have also contributed to pushing inflation below the Federal Reserve's 2 percent target.

Persistently low inflation is expected to have an impact on the timing of a third interest rate increase this year from the U.S. central bank, which most economists expect would be in December.

Last month, prices for imported petroleum fell 2.2 percent after decreasing 1.2 percent in May. Imported petroleum prices have not risen since gaining 0.8 percent in February.

Import prices excluding petroleum edged up 0.1 percent after being unchanged the prior month. Import prices excluding petroleum increased 1.4 percent in the 12 months through June.

Prices for imported capital goods rose 0.2 percent, the largest increase since May 2014. Imported motor vehicle prices fell 0.2 percent, while the cost of imported food increased 0.9 percent.

The report also showed export prices fell 0.2 percent in June, pushed lower by decreasing agricultural prices, after dropping 0.5 percent in May. They rose 0.6 percent year-on-year after gaining 1.5 percent in May. (Reporting By Lucia Mutikani; Editing by Andrea Ricci)