Import Prices in U.S. Gained 2% in August; Up 0.4% Ex-Fuel
Prices of goods imported into the U.S. rose in August for the fifth time in six months, led by an increase in petroleum costs.
The 2 percent gain in the import price index followed a 0.7 percent decrease the prior month, Labor Department data showed today in Washington. Prices excluding fuels rose 0.4 percent, as the cost of industrial supplies and materials rose.
Resurgent energy costs will keep pressure on profits as the worst recession since the Great Depression makes it harder for companies to pass on higher expenses to consumers. Economists predict a recovery will be slow to take hold, keeping inflation tame and giving Federal Reserve policy makers leeway to keep interest rates near zero for longer to spur growth.
“The Fed will remain on hold for the foreseeable future,” Zach Pandl, an economist at Nomura Securities International Inc. in New York, said before the report. “It’s very unlikely that firms have significant pricing power” in the current environment, he said.
Economists forecast prices would rise 1 percent, according to the median of 56 responses in a Bloomberg News survey, after a previously reported 0.7 percent drop in July. Estimates ranged from a drop of 0.5 percent to a gain of 3.2 percent.
Today’s report showed that compared with a year earlier, prices of imported goods fell 15 percent, after a record 19.2 percent year-on-year decline in July. Excluding petroleum, prices were 5.1 percent lower than in August 2008.
Import prices were forecast to drop 16 percent from a year earlier, according to the survey.
Inflation Gauges
The import-price index is the first of three monthly price gauges from the Labor Department. The government is scheduled to release the wholesale price report Sept. 15, followed by consumer prices the following day.
Fed policy makers on Aug. 12 committed to keeping the key interest rate between zero and 0.25 percentage point “for an extended period” to promote economic recovery. They said they expected “inflation will remain subdued for some time.”
The price of imported petroleum and petroleum products increased 10.5 percent in August, the sixth gain in seven months. Prices were 38 percent lower than a year earlier.
A slumping dollar may also boost import prices in coming months. The greenback was down about 10 percent through last week against a trade-weighted basket of currencies of major U.S. trading partners since reaching a five-year high in March.
Capital Goods
Today’s report showed the cost of imported capital goods, such as generators and trucks, increased 0.1 percent last month, after remaining unchanged the prior month. The cost of industrial supplies including fuels and building materials rose 6.1 percent.
Consumer goods excluding automobiles fell 0.2 percent for a second straight month and were down 1.2 percent over the last 12 months.
Prices of imported automobiles, parts and engines rose 0.2 percent after increasing 0.1 percent the prior month.
Toyota Motor Corp. is among carmakers raising prices. The Japanese auto manufacturer on Aug. 14 announced new prices for selected 2010 Lexus brand models, including its Avalon sedan and Highlander mid-size SUV, amounting to about 1 percent on average.
Competition from herbicide producers in China is forcing St. Louis, Missouri-based Monsanto Co., the world’s largest seed producer, to forecast a decline in earnings in fiscal 2010. Chinese competitors introduced generic herbicides that forced the company to cut its own prices, Chief Executive Officer Hugh Grant told investors yesterday in London.
China, Japan
Prices of goods from China rose 0.2 percent, those from Japan rose 0.1 percent and those from the European Union gained 0.2 percent. Products from Latin America rose 3.4 percent, led by oil, and those from Canada rose 2.7 percent, also on energy.
U.S. export prices increased 0.7 percent after decreasing 0.3 percent the prior month. Prices of farm exports rose 0.2 percent, while those of non-farm exports rose 0.8 percent.
The Commerce Department said yesterday that the U.S. trade deficit widened in July and imports gained by a record 4.7 percent. The gap between imports and exports grew 16 percent, the most in more than a decade, to $32 billion from a revised $27.5 billion in June.