Prices of goods imported into the U.S. unexpectedly fell in October, reflecting lower costs for fuel and food.
The 0.6 percent decline in the import-price index follows no change in September, revised down from a previously estimated 0.3 percent gain, Labor Department figures showed today in Washington. Economists projected the gauge would also be unchanged in October, according to the median forecast in a Bloomberg News survey. Prices excluding fuel fell 0.2 percent, the first decline since July 2010.
Slower growth from Europe to Asia and a strengthening dollar may restrain the cost of goods and materials from abroad. At the same time, the pace of job gains in the U.S. is holding down most wages, the biggest expense for companies.
“Inflation pressures remain tame,” Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “Energy will push import prices lower.”
Projections for import prices ranged from a decrease of 1 percent to a 1 percent increase, according to the Bloomberg survey of 48 economists.
Compared with a year earlier, import prices rose 11 percent, today’s report showed, down from a 12.9 percent increase in the 12 months ended in September.
The cost of imported petroleum fell 1 percent from the prior month and was up 36 percent from a year earlier. The price of imported unfinished metals decreased 4.1 percent.
Imported food was 1 percent less expensive last month, the biggest decline since June. Costs of imported automobiles rose 0.1 percent and were up 3.6 percent from October 2010.
Consumer goods excluding vehicles showed a 0.7 percent price gain, the biggest monthly gain since October 1992, and were up 3.6 percent over the past 12 months.
A strengthening of the U.S. dollar over the last couple of months may make foreign goods cheaper in the U.S. while American-made goods become more expensive overseas. Since Sept. 1, the Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against that of six major trade partners including the euro and yen, has gained about 4.3 percent after falling 11 percent in the year ended Aug. 31.
Imported goods from China increased 0.4 percent and were up 3.9 percent over the past 12 months, the biggest year-over-year gain since October 2008.
Inflation “appears to have moderated since earlier in the year,” Federal Reserve policy makers said in a Nov. 2 statement after their most recent monetary policy meeting.
“It does feel like inflation has peaked,” Walter Robb, co-chief executive officer at Austin, Texas-based Whole Foods Market Inc., said in a Nov. 2 conference call with analysts. “There still is inflation present but it has moderated some and given us a little bit more flexibility.”
The Fed’s preferred price gauge, which excludes food and fuel, was little changed in September from the prior month after rising 0.2 percent in August. Fed policy makers aim for long-run overall inflation of 1.7 percent to 2 percent, according to their Nov. 2 forecast.
Policy makers pledged in August to hold the benchmark interest rate near zero at least through the middle of 2013 so long as joblessness stays high and the inflation outlook is “subdued.”
U.S. export prices decreased 2.1 percent, the biggest monthly decline since December 2008, after rising 0.4 percent the previous month, today’s figures showed. Prices of farm exports dropped 6.5 percent, and those of non-farm goods decreased 1.5 percent.
The import-price index is the first of three monthly price gauges from the Labor Department. Data on producer prices come out Nov. 15, followed the next day by the consumer-price index.
© Copyright 2023 Bloomberg News. All rights reserved.