US import prices unexpectedly rise in April

[WASHINGTON] US import prices unexpectedly rose in April as a surge in the cost of capital goods offset cheaper energy products. Import prices gained 0.1 per cent last month after dropping 0.4 per cent in March, the Labor Department’s Bureau of Labor Statistics said on Friday (May 16).

Economists polled by Reuters had forecast import prices, which exclude tariffs, would decrease 0.4 per cent. In the 12 months through April, import prices edged up 0.1 per cent.

Data this week showed benign consumer and producer price readings in April. Economists expect the impact of President Donald Trump’s sweeping import duties to become evident in inflation data by the middle of this year.

The tariffs have raised fears of a slowdown in global growth, contributing to a dampening of oil prices.

Federal Reserve Chair Jerome Powell warned on Thursday that “we may be entering a period of more frequent, and potentially more persistent, supply shocks – a difficult challenge for the economy and for central banks.”

Economists expect the US central bank will resume cutting interest rates either in September or December. The Fed left its benchmark overnight interest rate in the 4.24 per cent-4.50 per cent range earlier this month.

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Imported fuel prices fell 2.6 per cent in April after decreasing by 3.4 per cent in March. Food prices were unchanged after dipping 0.1 per cent in the prior month. Excluding fuels and food, import prices shot up 0.5 per cent. That followed a 0.1 per cent dip in March.

In the 12 months through March, the so-called core import prices increased 0.8 per cent. Prices for imported capital goods jumped 0.6 per cent, while those of consumer goods excluding motor vehicles increased 0.3 per cent. Prices for imported motor vehicles, parts and engines rose 0.2 per cent.

The weakness of the dollar is likely contributing to the firmness in these import prices.

Trump’s aggressive trade policies have rattled investors’ confidence in the dollar, leading to a sharp fall in US assets. The trade-weighted dollar is down about 5.1 per cent this year, with most of the depreciation occurring in April. REUTERS