US import prices post second straight monthly decline in November
US IMPORT prices fell for a second straight month in November amid decreases in the costs of energy products and motor vehicles, suggesting that import deflation could help to lower domestic inflation next year.
Import prices dropped 0.4 per cent last month, the Labor Department’s Bureau of Labor Statistics said on Thursday (Dec 14). Data for October was revised to show prices declining 0.6 per cent instead of 0.8 per cent as previously reported. Economists polled by Reuters had forecast import prices, which exclude tariffs, falling 0.8 per cent.
In the 12 months through November, import prices decreased 1.4 per cent after dropping 1.8 per cent in October. Annual import prices have now dropped for 10 consecutive months.
Data this week showed consumer prices rising moderately in November and producer prices unchanged. Though inflation remains above the Federal Reserve’s 2 per cent target, price increases are becoming less broad-based.
The US central bank held rates steady on Wednesday and signalled in new economic projections that the historic tightening of monetary policy engineered over the last two years is at an end and lower borrowing costs are coming in 2024.
Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25 per cent-5.50 per cent range. Financial markets are leaning towards a rate cut as soon as May, according to CME Group’s FedWatch Tool.
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Imported fuel prices decreased 5.6 per cent, extending October’s 3.7 per cent decline. The cost of imported food rebounded 0.9 per cent after falling 0.5 per cent in the prior month.
Excluding fuels and food, import prices edged up 0.1 per cent after dipping 0.1 per cent in October. These so-called core import prices decreased 0.6 per cent year-on-year in October.
Prices for imported capital goods were unchanged after slipping 0.1 per cent in the prior month. The cost of motor vehicles, parts and engines fell 0.1 per cent after rising 0.3 per cent in October.
Consumer goods, excluding automotives were unchanged following a 0.1 per cent drop in the prior month. Higher borrowing costs are cooling domestic demand.
Prices of goods imported from China fell 0.1 per cent after being unchanged in October. They dropped 2.9 per cent year-on-year in November.
The report also showed export prices declined 0.9 per cent in November, matching October’s drop. Export prices for agricultural commodities rose 0.2 per cent, lifted by fruit and soybeans. But prices for corn, meat and other foods and food preparations fell.
Non-agricultural export prices decreased 1.0 per cent. Export prices declined 5.2 per cent year-on-year in November after sliding 4.7 per cent in October. REUTERS
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