Higher fuel prices lift US import prices; underlying trend soft

US IMPORT prices increased more than expected in August as the cost of energy products surged, but underlying imported price pressures remained subdued, which bodes well for the overall domestic inflation outlook.

Import prices increased 0.5 per cent last month, the Labor Department said on Friday (Sep 15). Data for July was revised lower to show prices rising 0.1 per cent instead of the previously reported 0.4 per cent. Economists polled by Reuters had forecast import prices, which exclude tariffs, gaining 0.3 per cent.

In the 12 months through August, import prices dropped 3.0 per cent after decreasing 4.6 per cent in July. Annual import prices have now declined for seven straight months.

Data this week showed inflation making steady progress toward the Federal Reserve’s 2 per cent target, with underlying consumer and producer prices rising moderately in August.

A jump in petrol prices, however, boosted overall consumer and producer prices. The US central bank is expected to leave interest rates unchanged next Wednesday. Since March 2022, the central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25 per cent-5.50 per cent range.

Imported fuel prices accelerated 6.7 per cent last month, the largest increase since March 2022, after rising 2.2 per cent in July. Food prices gained 0.7 per cent. Excluding fuels and food, import prices decreased 0.2 per cent after a similar decline in July.

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These so-called core import prices dropped 1.3 per cent on a year-on-year basis in August.

Prices for imported capital goods fell 0.2 per cent in August. Imported motor vehicle prices dipped 0.1 per cent. The cost of imported consumer goods excluding motor vehicles rebounded 0.1 per cent.

Prices of goods imported from China rose 0.1 per cent, the first increase since October 2022. Chinese import prices were down 2.2 per cent on a year-on-year basis in August.

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There were also monthly increases in the prices of goods imported from Canada, the European Union and Mexico.

The report also showed export prices shot up 1.3 per cent in August, the biggest gain since May 2022, after rising 0.5 per cent in July. Prices for agricultural exports decreased 2.2 per cent, pulled down by lower prices for soybeans, corn, wheat and nuts.

Non-agricultural export prices increased 1.7 per cent, also the biggest advance since May 2022. They were boosted by higher prices for non-agricultural industrial supplies and materials, capital goods and automotive vehicles, which more than offset lower prices for consumer goods and non-agricultural foods.

Export prices fell 5.5 per cent on a year-on-year basis in August, after declining 8.0 per cent in July. REUTERS