US import prices unchanged as petroleum costs drop

US import prices were unexpectedly flat in April as a decline in the cost of petroleum offset gains in food and other products, a further sign that inflation has probably peaked, though it will remain elevated.

The unchanged reading in import prices followed a 2.9 per cent surge in March, the Labor Department said on Friday.

In the 12 months through April, import prices rose 12.0 per cent after accelerating 13.0 per cent in the year through March. Economists polled by Reuters had forecast import prices, which exclude tariffs, would climb 0.6 per cent.

Import prices increased 6.8 per cent over the first quarter.

Government data this week showed monthly consumer prices increased at the slowest pace in eight months, while the gain in producer prices was the smallest since last September.

With oil prices drifting higher in May, monthly import, consumer and producer prices are likely to pick up. Annual inflation rates are expected to continue edging lower, though likely to stay above the Federal Reserve’s 2 per cent.

The deceleration is mostly the result of last year’s big increases dropping out of the calculation.

The Fed last week raised its policy interest rate by half a percentage point, the biggest hike in 22 years, and said it would begin trimming its bond holdings next month. The US central bank started raising rates in March.

Imported fuel prices dropped 2.4 per cent last month after soaring 17.3 per cent in March. Petroleum prices declined 2.9 per cent, while the cost of imported food increased 0.9 per cent. Prices of imported capital goods rose 0.4 per cent, matching March’s gain. The cost of imported consumer goods excluding motor vehicles was unchanged. Prices of imported motor vehicles and parts climbed 0.3 per cent.

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Excluding fuel and food, import prices rose 0.4 per cent. These so-called core import prices advanced 1.3 per cent in March. They increased 6.9 per cent on a year-on-year basis in April.

Some of the slowdown in the monthly core import price gains reflect the dollar’s strength against the currencies of the United States’ main trade partners. The greenback has gained about 2.65 per cent on a trade-weighted basis since the Fed started raising interest rates.

The price of goods imported from China advanced 0.2 per cent after rising 0.5 per cent in March. They increased 4.6 per cent on a year-on-year basis.

The report also showed export prices rose 0.6 per cent in April after surging 4.1 per cent in March. Prices for agricultural exports advanced 1.1 per cent, a slowdown from the 4.3 per cent acceleration logged in March. Higher prices in April for corn, cotton, meat and nuts more than offset lower prices for wheat and soybeans.

Nonagricultural export prices rose 0.5 per cent. Export prices increased 18.0 per cent on a year-on-year basis in April. That followed an 18.6% advance in March. AFP