The US Labor Department reported Tuesday that US import prices fell by the most in two years in May as prices slumped in the core energy and food categories. The overall decline was 1.0 percent, the biggest decline since June 2010. The report also contained a revision to April's data showing that prices remained flat instead of falling 0.5 percent, as initially reported. The decline in import prices in May was expected, matching the consensus estimate from economists in a recent Reuters survey, and also contributed to the first year-over-year decline since October 2009, as prices have slipped 0.3 percent since last May.
Excluding the volatile food and energy categories, prices were unchanged last month, as were prices in the narrower category of capital goods. The report showed declines in prices for automobiles, industrial supplies and materials, as well. The report backs up the Federal Reserve's prediction that inflation would be relatively benign over the spring ad summer, and also backs up some economists' claims that global demand is weakening.