WASHINGTON (Reuters) -U.S. import prices dropped by the most in eight months in August amid lower costs for a broad range of goods, suggesting that domestic inflation will continue to subside in the months ahead.

The report from the Labor Department on Friday followed on the heels of data this week showing mild increases in producer and consumer prices in August, though some stickiness remained in underlying inflation. With price pressures ebbing, the Federal Reserve is now focused on the labor market, which has slowed considerably from last year's robust job growth.

"The inflation flare-up early in the year is no longer evident in the prices of imported goods coming into the country and this is another reason to believe that the balance of risks have shifted for Fed officials back to downside risks for the economy and labor market from the inflation risks earlier this year," said Christopher Rupkey, chief economist at FWDBONDS.

Import prices fell 0.3% last month, the largest decline since December 2023, after an unrevised 0.1% gain in July, the Labor Department's Bureau of Labor Statistics said. Economists polled by Reuters had expected import prices, which exclude tariffs, would fall 0.2%.

In the 12 months through August, import prices increased 0.8% after advancing 1.7% in July.

The U.S. central bank is expected to kick off its long-awaited easing cycle next Wednesday, with a 25-basis-point interest rate cut almost assured. Financial market expectations for a half-percentage-point reduction have been dashed by labor market stability and still-warm core inflation readings.

The Fed has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range for more than a year, having raised it by 525 basis points in 2022 and 2023.

Imported fuels prices dropped 3.0% last month, with petroleum products decreasing 3.2%. Prices for fuels increased 1.1% in July. Food prices dipped 0.1% after surging 1.5% in July.

Excluding fuels and food, import prices slipped 0.1%. These so-called core import prices were unchanged in July. The dollar's strength against the currencies of the United States' main trade partners has largely kept imported inflation contained. Core import prices rose 1.1% year-on-year in August.

Prices of imported industrial supplies and materials excluding petroleum fell 0.4%. Imported capital goods prices edged up 0.1%, lifted by nonelectrical machinery. Prices for imported motor vehicles and engines were unchanged after increasing 0.4% in July.

The cost of imported consumer goods, excluding automotives, declined for a third straight month, with nonmanufactured consumer goods dropping 2.0%.

Prices for Chinese imports decreased 0.2% after being unchanged for five straight months. They dropped 1.4% year-on-year in August. The cost of goods imported from Canada declined 1.4%, the most since December 2023. Prices of goods imported from Mexico fell 0.3%. But prices for goods imported from the European Union rebounded 0.2% after declining 0.4% in July.

The report also showed export prices falling 0.7% last month after rising 0.5% in July. Prices for both agricultural and nonagricultural exports dropped last month. There were decreases in the prices of soybeans, corn, wheat and fruit. Prices for industrial supplies and materials as well as capital goods declined, more than offsetting higher prices for consumer goods, motor vehicles and nonagricultural foods.

Export prices fell 0.7% year-on-year in August after increasing 1.2% in July.