WASHINGTON, (Reuters) – The unexpected drop in import prices in December was due to a decrease in petroleum product costs. This is a sign that high inflation may be over.

According to Friday’s Labor Department, import prices fell 0.2% in December, marking the first decline since August. They had increased 0.7% in November. Prices rose 10.4% in December after rising 11.7% in November.

Reuters polled economic experts to predict that import prices (which exclude tariffs) will rise by 0.3%.

On Thursday, the government announced that December saw a 0.2% increase in producer prices. This is the lowest rise since November 2020. The December moderation of China’s producers prices has helped to boost hopes that inflation may have peaked, or is on the verge of doing so. Economists believe that the U.S. will see slower Chinese PPI eventually. Also, supply chains are improving.

After rising 2.3% last November, import fuel prices fell 6.5%. While petroleum prices declined 6.0% last month, import food costs increased 0.5%.

Import prices increased 0.5%, excluding fuel and food. Core import prices rose 0.6% in November. In December, they increased 5.7% year over year.

Also, the report showed that export prices fell 1.8% in December following an increase of 0.8% in November. Export prices rose 0.8%. Nonagricultural export prices dropped 2.1%.

In December, export prices rose 14.7% year over year. This follows a November 18.2% increase.