U.S. import prices fall for second straight month
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[January 16, 2019]
WASHINGTON, (Reuters) - U.S. import prices
fell for a second straight month in December as the cost of petroleum
products tumbled and a strong dollar curbed prices of other goods,
leading to the largest annual drop in more than two years.
The Labor Department said on Wednesday import prices declined 1.0
percent last month after a downwardly revised 1.9 percent drop in
November.
Economists polled by Reuters had forecast import prices decreasing 1.3
percent in December after a previously reported 1.6 percent decline in
November.
In the 12 months through December, import prices fell 0.6 percent. That
was the biggest annual drop since September 2016. It was also the first
year-on-year decline since October 2016 and followed a 0.5 percent rise
in November.
Import prices fell 0.6 percent in 2018, the first calendar year drop
since 2015, after increasing 3.2 percent in 2017.
Coming in the wake of data showing declines in headline producer and
consumer prices in December, the import prices report strengthens
expectations of a pause in interest rate increases from the Federal
Reserve in the near term.
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Fed Chairman Jerome Powell said last week that low inflation afforded
policymakers "the ability to be patient and watch patiently and
carefully" while they monitored economic data and financial markets for
risks to growth. The U.S. central bank has forecast two interest rate
increases this year.
Against the backdrop of low inflation and slowing growth in China and
Europe, some economists believe the Fed will not hike interest rates in
the first half of 2019. There are signs the U.S. economy slowed at the
end of 2018, with consumer and business sentiment surveys weakening
sharply in December.
But an ongoing partial shutdown of the federal government, which has
delayed the release of data from the Bureau of Economic Analysis and
Census Bureau is making it hard to get a good read on the economy and
could complicate policy decisions.
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A stack of shipping containers are pictured in the Port of Miami in
Miami, Florida, U.S., May 19, 2016. REUTERS/Carlo Allegri
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The government partially shut on Dec. 22 amid demands by President
Donald Trump that the U.S. Congress give him $5.7 billion this year to
help build a wall on the country's border with Mexico. The longest
government shutdown in history has delayed the release of December
retail sales and November business inventory data, which were scheduled
for Wednesday.
Last month, prices for imported fuels and lubricants fell 9.2 percent
after tumbling 13.3 percent in November. Prices for imported petroleum
declined 11.6 percent after decreasing 16.0 percent in November.
Imported food prices edged up 0.1 percent in December after dropping 2.2
percent in the prior month. Excluding fuels and food, import prices were
unchanged last month after slipping 0.1 percent in November. The
so-called core import prices rose 0.6 percent in the 12 months through
December.
Core import price readings are likely being held down by the strong
dollar, which gained about 7.5 percent last year against the currencies
of the United States' main trade partners.
The report also showed export prices fell 0.6 percent in December after
declining 0.8 percent in November. A 3.9 percent rise in prices of
agricultural exports was offset by a 1.1 percent drop in prices of
nonagricultural goods.
Export prices increased 1.1 percent on a year-on-year basis in December
after rising 1.8 percent in November. They increased 1.1 percent in
2018.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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