WASHINGTON (Reuters) - U.S. import prices dropped by the most in eight months in August amid lower costs for fuels and food products, suggesting that domestic inflation will continue to subside in the months ahead.

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 on Friday. 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. Government data this week showed mild increases in producer and consumer prices in August, though some stickiness remained in underlying inflation.

The Federal Reserve 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 U.S. central bank 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.