Rise in import prices in U. S. is lowest in two years
2023.02.17 12:08
Rise in import prices in U. S. is lowest in two years
By Ray Johnson
Budrigannews.com – In January, as energy product costs fell, U.S. import prices decreased for the seventh consecutive month, resulting in the smallest annual increase in imported inflation in two years.
After data this week showed a jump in monthly consumer and producer prices in January, indicating a slow disinflation journey, fears in the financial market that the Federal Reserve could maintain its interest rate hike campaign through summer were little helped by the Labor Department report on Friday.
After decreasing by 0.1% in December, import prices decreased by 0.2% in January. Excluding tariffs, the decline in import prices was in line with economists’ expectations.
Import prices increased 0.8% between January and the previous year. Following a 3.0% increase in December, that was the smallest gain year over year since December 2020.
After decreasing by 4.4% in December, import fuel prices decreased by 4.9%. Petroleum prices dropped 4.5 percent while falling 11.2%. The cost of food imported increased by 1.3%.
Import prices increased by 0.2 percent, excluding fuel and food. In December, these so-called core import prices increased by 0.4%. Prices for core imports have increased twice in a row, likely as a result of the dollar’s recent weakness against the currencies of the United States’ primary trade partners.
Since March, the Fed has increased its policy rate by 450 basis points, moving it from close to zero to a range of 4.50 percent-4.75 percent. The majority of these increases occurred between May and December. Financial markets are betting on another 25 basis point increase in June, despite the fact that two additional rate hikes are anticipated in March and May.
This month’s data suggest that the economy was strong at the beginning of the year, with strong job growth and increases in retail sales. Several economists, including those at Bank of America (NYSE:) Securities, to anticipate a June rate increase.
In a note, Bank of America Securities stated, “March and May hikes appear very likely, and the Fed may have to hike further if inflation, job growth, and consumer demand refuse to soften.” Our forecast now includes a 25 basis point increase in June.”
In January, the cost of imported capital goods went up, and the cost of motor vehicles went up by 0.6 percent. Prices for consumer goods, excluding autos, increased by 0.2 percent.
The largest monthly decrease in the cost of importing goods from China since November 2016 was 0.4 percent. That reflected a decrease of 2.3% in the manufacturing cost of communications equipment. The cost of goods from Mexico increased by 0.8 percent, while imports from the European Union went up by 1.3 percent.
Conrad DeQuadros, senior economic advisor at Brean Capital in New York, stated, “These data provide no encouragement for those looking for manufactured goods price increases to subside to pre-pandemic trends on an easing of supply-chain constraints.”
In addition, the Labor Department reported that export prices increased by 0.8% in January, following a six-month decline. As a result of a 21.6% drop in vegetable prices, agricultural export prices decreased by 0.2 percent, more than compensating for higher prices for soybeans and corn.
Industrial supplies and materials, capital goods, automobiles, and consumer goods contributed 0.8% of the increase in non-agricultural export prices.
After rising by 4.3% in December, export prices increased by 2.3% year-over-year, the lowest gain since December 2020.
