U.S. import prices fell last month by the most in more than three years mostly due to a plunge in the cost of imported oil, further icing inflation pressures.
Overall import prices dropped 2.7 percent, the Labor Department said on Thursday. It was the third straight month of declining prices for goods and services bought abroad.
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Import prices have only risen once in the last seven months. June's decline was the steepest since December 2008.
The decline last month was even more than analysts had expected, and could give the U.S. Federal Reserve more scope to ease monetary policy if policymakers think the economy needs it.
The Fed targets annual inflation of 2 percent, and policymakers' preferred measure of inflation showed prices up 1.5 percent in May from a year earlier.
Prices for imported petroleum plunged 10.5 percent, also the sharpest drop since December 2008.
Even stripping out fuels and food, import prices were down 0.3 percent. That could be a sign of the recent cooling in the global economy, which has been largely caused by Europe's debt crisis.
China's economy is also showing signs it is slowing.
The Labor Department report also showed export prices fell 1.7 percent last month, the second consecutive monthly decline.