U.S. import prices dropped by the most in more than five years in March amid declines in the costs of petroleum products and a range of other goods, pointing to import deflation that could deepen amid the coronavirus pandemic.
The Labor Department said on Tuesday import prices dropped 2.3% last month, the largest decline since January 2015, after a downwardly revised 0.7% drop in February.
Import prices, which exclude tariffs, were previously reported to have decreased 0.5% in February.
Economists polled by Reuters had seen import prices tumbling 3.2% in March. In the 12 months through March, import prices plunged 4.1%. That was the biggest drop since June 2016 and followed a 1.3% decline in February.
The Labor Department said import and export price quotes are requested for transactions occurring as close to the first day of the month as possible. It said while not directly related to the coronavirus pandemic, response rates for March were approximately 6.5 percentage points lower than March 2019.
The report followed in the wake of data last week showing the biggest drop in the consumer price index in more than five years in March amid a tumble in the cost of gasoline, and record decreases in hotel accommodation, apparel and airline ticket prices. Producer prices also declined in March.
The weak inflation readings reflected subdued demand as state and local governments adopted stiff measures to control the spread of COVID-19, the respiratory illness caused by the coronavirus, virtually grounding the country and sending the economy into a tailspin and millions out of work.
At the same time, the prospects of a deep global recession and an oil price war between Russia and Saudi Arabia, which has since been resolved, have sent crude prices tumbling. Cheaper gasoline and weak demand are expected to offset price increases caused by bottlenecks in the supply chain.
BROAD PRICE DECLINE
In March, prices for imported fuels and lubricants dropped 26.8%, the most since November 2008, after diving 9.0% in February. Petroleum prices tumbled 27.4% last month after dropping 8.8% in February. Imported food prices fell 1.0% last month. That followed a 1.3% jump in February.
Excluding fuels and food, import prices edged up 0.1% last month, matching February's gain. The so-called core import prices fell 0.6% in the 12 months through March.
The cost of goods imported from China edged up 0.1% in March after decreasing 0.3% in the prior month. Prices declined 1.2% year-on-year in March.
Last month, prices for imported capital goods edged up 0.1%, matching February's gain.
The cost of imported motor vehicles shot up 0.4% after being unchanged in February. But prices for consumer goods excluding autos dropped 0.3% in March after being unchanged in the prior month, pointing to weak core consumer prices.
The report also showed export prices dropped 1.6% in March, the largest decline since January 2015, depressed by decreases in prices for agricultural and nonagricultural products. That followed a 1.1% drop in February. Export prices fell 3.6% on a year-on-year basis in March, the largest decrease since May 2016. Export prices dropped 1.3% year-on-year in February.
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