WASHINGTON, Feb 17 (Reuters) – U.S. import prices dropped for a seventh straight month in January amid declining costs for energy products, leading to the smallest annual increase in imported inflation since late 2020, government data showed on Friday.
Import prices fell 0.2% last month after slipping 0.1% in December, the Labor Department said. Economists polled by Reuters had forecast import prices, which exclude tariffs, falling 0.2%. In the 12 months through January, import prices increased 0.8%. That was the smallest gain since December 2020 and followed a 3.0% rise in December.
Imported fuel prices dropped 4.9% after declining 4.4% in December. Petroleum prices fell 4.5%. The cost of imported food surged 1.3%. Excluding fuel and food, import prices gained 0.2%. These so-called core import prices increased 0.4% in December.
Data this week showed an acceleration in monthly consumer and producer prices in January, fanning financial market fears that the Federal Reserve could maintain its interest hiking campaign through summer.
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The Fed has raised its policy rate by 450 basis points since last March from near zero to a 4.50%-4.75% range, with the bulk of the increases between May and December. Though two additional rate hikes of 25 basis points are expected in March and May, financial markets are betting on another increase in June.
Reporting By Lucia Mutikani; Editing by Chizu Nomiyama
Our Standards: The Thomson Reuters Trust Principles.
2023-02-17 10:00:03
Source from www.reuters.com
At the start of 2021, the U.S. Department of Labor reported that U.S. import prices had experienced a seventh consecutive monthly decline in January.
On Thursday, the department said that the price of imported goods including a broad range of consumer and industrial products had dropped by 0.3% in January from the prior month, bringing the overall decline to 4.9% from the same period last year.
The decline in import prices was largely driven by a 3.2% drop in the cost of foreign energy goods, which accounted for four-fifths of the decrease; the cost of oil and natural gas fell 8.3% and 2.3%, respectively.
The cost of non-fuel imports, meanwhile, increased 0.2%, the first uptick in seven months. The gain was largely due to a 0.9% rise in the cost of foods, feeds, and beverages and a 0.7% surge in the price of automotive vehicles.
Excluding fuel, the U.S. import prices declined by 1.5% compared to the same period last year.
Analysts believe the trend of lower U.S. import prices will likely remain consistent in coming months, as the global pandemic continues to put pressure on the economy.
“We expect further declines in import prices in the near term,” said David Wilcox, the head of global macro research at the Federal Reserve Bank of New York. “We anticipate that these deflationary pressures will persist until the economic outlook improves, particularly in Europe and the rest of the world.”
The Agency for International Development said that the decline in U.S. import prices is an indication that global economic growth is still lackluster and is likely to remain that way for some time.
“The fall in import prices is a sign that global economic activity is remain weak,” said Mohammad Nawaz, the agency’s chief economist.
“These lower import prices were mostly driven by the cost of fuel, which has been steadily declining in recent months. This trend is likely to continue as long as the global economy remains sluggish.”
Overall, the seventh consecutive monthly dip in U.S. import prices is a sign of weakness in the global economy. Although lower import prices have benefits, including helping businesses lower their production costs, economists will be closely monitoring their movements to assess the trajectory of the global economy.