Import Prices See Biggest Decline Since December 2008

U.S. import prices saw their biggest drop in six years in December fueled by falling petroleum costs, which single-handedly kept import inflation pressures down.

The Labor Department said on Wednesday import prices fell 2.5 percent in Dec., which is the largest decline since December 2008. In November, they fell 1.8 percent in November, but it is now the sixth straight month of declines in import prices.

Economists polled by Reuters had forecast import prices dropping 2.9 percent last month. In the 12 months through December, prices fell 5.5 percent, the largest drop since 2009.

Weak global market demand and a booming increase in U.S. shale production are fueling downward pressure on crude oil prices. Brent crude oil (EPA:BRNTB) prices fell to a near six-year low on Tuesday, while a strong dollar (USDUSD) is also helping to slow imported inflation pressures.

Imported petroleum prices tanked 16.6 percent in December, which is also the biggest drop since December 2008. In November, it declined 9.1 percent, while imported food prices rose 0.9 percent.

Import prices excluding petroleum edged up 0.1 percent last month after falling 0.3 percent in November.

The Labor Department report also showed export prices fell 1.2 percent in December, which is the biggest drop since June 2012, as a strong dollar reduces the competitiveness of U.S. exports. Prices had declined 0.8 percent in November.

In the 12 months through December, export prices have fallen by 3.2 percent, or the biggest decline since 2009.