U.S. import prices likely to have flattened in June on decline in energy prices

In May, the U.S. import prices weakened in May due to the third straight drop in imported petroleum prices. The import prices had dropped 0.3 percent sequentially. Excluding fuel, import prices were flat in May and rose 0.8 percent year-on-year, a pullback from the five-year high seen in April. Export prices also dropped amid widespread monthly deflation.

Another drop in energy prices is expected to keep import prices flat in June, noted Wells Fargo in a research report. In the near-term, energy prices are expected to continue to curb overall import price growth. Taking a longer-term view, the outlook for medium-term U.S. dollar weakness, if realized, would apply some modest upward pressure to nonfuel import prices, all else equal, stated Wells Fargo.

“With core inflation moving further away from the FOMC’s two percent target, a reversal of the dollar’s strength over the past few years could help halt this recent slide in core inflation”, added Wells Fargo.

At 23:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was bearish at -94.3269. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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