Consumer sentiment index declines 5.1 to 65.6 in June
Twelvemonth inflation expectations unchanged at 3.3
Import prices fall 0.4 in May; up 1.1 yearonyear

WASHINGTON, June 14 Reuters U.S. import prices fell for the first time in five months in May amid lower prices for energy products, providing another boost to the domestic inflation outlook.

The unexpectedly benign report from the Labor Department on Friday combined with data this week showing tame inflation readings last month to keep a September interest rate cut from the Federal Reserve on the table.

Signs that inflation is subsiding have, however, failed to lift spirits among Americans, with a survey on Friday showing consumer sentiment dropping to a sevenmonth low in June. The U.S. central bank on Wednesday pushed out the start of rate cuts to perhaps as late as December, with policymakers projecting only a single quarterpercentagepoint reduction for this year.

Fed officials did not see what they were hoping for in the inflation trend when they met earlier this week, but the winds of change are coming for those bearish inflation outlooks, said Christopher Rupkey, chief economist at FWDBONDS.

We would not rule out a first rate cut in September. The decline in imported goods prices will surely be welcomed by inflationweary consumers.

Import prices dropped 0.4 last month after an unrevised 0.9 surge in April, the Labor Department39;s Bureau of Labor Statistics said. That was the first decline in import…