U.S. import prices post
largest drop in nine months
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[December 13, 2016]
(Reuters) - U.S. import prices recorded their biggest drop in nine
months in November on declining petroleum costs, with renewed dollar
strength threatening to keep imported inflation subdued.
The Labor Department said on Tuesday import prices fell 0.3 percent last
month after a downwardly revised 0.4 percent gain in October. Last
month's drop was the biggest since February and followed two straight
months of increases.
Economists polled by Reuters had forecast import prices falling 0.4
percent last month after a previously reported 0.5 percent increase.
In the 12 months through November, import prices dipped 0.1 percent, the
smallest decrease since July 2014, after slipping 0.3 percent in the 12
months through October.
The soft import price reading is unlikely to change expectations that
the Federal Reserve will raise interest rates on Wednesday, given a
tightening labor market and firming economy. The U.S. central bank's
policy-setting committee was due to start its two-day meeting later on
The Fed hiked its benchmark overnight interest rate last December for
the first time in nearly a decade.
The dollar's surge against the currencies of the United States' main
trading partners between June 2014 and January 2016 resulted in imported
deflation, helping to keep inflation below the Fed's 2 percent target.
The greenback's rally appeared to fade for much of the year, easing some
of the pressure on import prices. But the dollar resumed its rally in
the wake of Donald Trump's victory in the Nov. 8 presidential election.
It has gained 3.5 percent on a trade-weighted basis since the election.
But with oil prices hovering around $50 per barrel and wages expected to
accelerate as the labor market nears full employment, some of the
dollar's drag on price pressures could be mitigated, allowing inflation
to rise toward its target.
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Ships gather off the ports of Los Angeles and Long Beach, California
in this aerial photo taken February 6, 2015. REUTERS/Bob Riha, Jr.
Imported petroleum prices dropped 4.7 percent last month, also the largest
decline since February, after increasing 7.3 percent in October. Import prices
excluding petroleum were unchanged after dipping 0.1 percent in the prior month.
The cost of imported food surged 1.5 percent. Prices for imported capital goods
fell 0.2 percent, while the cost of imported automobiles slipped 0.1 percent.
Imported consumer goods prices excluding automobiles fell 0.1 percent last
The report also showed export prices decreasing 0.1 percent in November after
rising 0.2 percent in October. Export prices were down 0.3 percent from a year
ago. That was the smallest decline since August 2014 and followed a 1.0 percent
decline in October.
((Reporting by Lucia Mutikani; Editing by Paul Simao))
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