The Bureau of Labor Statistics (BLS) has served the Federal Reserve up with yet another economic report that will make justifying an immediate rate hike on fed funds that much more complicated. August’s U.S. import prices fell by 1.8% in the month, following a 0.9% drop in the month of July.

Bloomberg had the consensus estimate at -1.6%, and the prior month’s reading of -0.9% was left as is in the revision.

The BLS specifically said that the August decrease was primarily driven by lower fuel prices, although falling non-fuel prices were said to be a key contributor to the decline as well.

Prices for U.S. exports also fell in August, down by 1.4%. Bloomberg was calling for a reading of only -0.4%, so that was a full percentage worse than expected. It was also on the heels of a 0.4% decline in the month of July.

Additional notes from the BLS will help to put this deflationary reading in better context, as follows:

• With the exception of May and June, import prices trended down over the past year, falling 11.4% between August 2014 and August 2015.
• The 12-month drop in August was the largest year-over-year decline since the index fell 12.0% in September 2009.
• Import fuel prices were negative by 13.3% in August, following a drop of 5.7% the previous month.
• The August drop was the largest one-month decrease since the index fell 20.1 % in January.
• The decline in fuel prices was led by a 14.2% drop in August petroleum prices, which followed a 5.9% decrease in July.
• Natural gas prices increased by 0.9% in August, but overall fuel prices fell by a sharp 48.3% over the past year — via a 49.6% decline in petroleum prices and a 34.4% drop in natural gas prices.
• The price index for nonfuel imports dropped 0.4% in August, after declining 0.3% in July and 0.2% in June. Nonfuel import prices last recorded a monthly advance when the index ticked up 0.1% in July 2014.
• Lower prices for nonfuel industrial supplies and materials as well as finished goods more than offset higher foods, feeds and beverages prices.
• Prices for nonfuel imports were negative by 3.0% for the year ended in August, which was shown to be the largest 12-month decline for the index since a 3.1% drop in October 2009.

To put the import and export deflation into context, those devaluation moves out of China would not have been felt yet as those import and export prices had likely been negotiated weeks and/or months in advance. That being said, the deflationary trends on imports could remain, even if local U.S. prices stay flat or tick up ever so slightly.

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