Prices of goods imported into the U.S. increased 1.8 percent in April, led by a jump in fuel costs and metals that threatens to boost inflation.
The larger-than-expected gain followed a revised 2.9 percent rise in March that was higher than previously estimated, the Labor Department said today in Washington. Prices excluding petroleum increased 1.1 percent on higher costs for capital goods, industrial supplies and auto parts.
A decline in the dollar is making foreign goods more expensive, adding to inflation pressures as food and energy prices soar. The increase is one reason investors project Federal Reserve policy makers will hold interest rates unchanged in coming months, even as economic growth slows.
"Inflation remains an issue, especially with rates as low as they are,'' Maxwell Clarke, chief U.S. economist at IDEAGlobal in New York, said before the report.
Economists had forecast import prices would rise 1.6 percent in April, following an originally reported 2.8 percent gain a month earlier, according to the median of 51 projections in a Bloomberg News survey. Estimates ranged from no change to a gain of 2.4 percent.
Compared with a year earlier, costs of imported goods jumped 15.4 percent, the biggest rise since the index was first published in 1982. Excluding all fuels, import costs rose 6.2 percent in the 12 months ended in April, the largest increase since December 1988.
Import-Price Index
The import-price index is the first of three monthly gauges of inflation from the Labor Department. The government is scheduled to issue its report on consumer prices, the broadest measure, tomorrow. The cost of living probably rose 0.3 percent for a second month, according to a survey median.
Retail sales in the U.S. fell in April, led by a slump in auto purchases that masked stronger-than-forecast gains elsewhere, indicating rising energy bills and a faltering labor market haven't stopped Americans from shopping. Purchases dropped 0.2 percent last month after a 0.2 percent increase in March, the Commerce Department said.
The Labor Department's report on wholesale prices is due next week.
Import expenses may keep rising in coming months as fuel continues to climb and the dollar remains weak. The value of the dollar, down 9.6 percent in the 12 months ended in April against a trade-weighted basket of currencies from major trading partners, makes foreign-made goods more expensive.
Imported Petroleum
The cost of imported petroleum and petroleum products increased 4.4 percent after increasing 9.2 percent the prior month. Compared with a year earlier, prices were up 57.2 percent.
Prices of unfinished metals related to durable goods rose 7.1 percent last month, the report showed.
The government measures imported petroleum costs differently than for wholesale prices. The producer price index takes the price reported on the Tuesday of the week that includes the 13th of the month.
The price of imported crude is based on the average cost reported by the Energy Department for the entire month. The data for other imported fuel costs, such as heating oil and natural gas, is based on the average price over the first five days of the month.
The price of crude oil traded on the New York Mercantile Exchange closed at a record $125.96 a barrel on May 9, indicating their will be more pressure from energy costs in coming months.
A Lot of Concern
"There's still going to be a lot of concern about inflation both in financial markets and the Fed until commodity prices turn,'' Zach Pandl, an economist at Lehman Brothers Holdings Inc. in New York, said before the report.
Investors project the Fed will not cut the benchmark interest rate at the conclusion of its next Federal Open Market Committee meeting on June 25. That would be the first pause since the central bank started cutting rates in September.
The cost of imported capital goods increased 0.8 percent in April, today's report showed. The price of consumer goods rose 0.2 percent.
Expenses for imported automobiles, parts and engines gained 0.4 percent.
Prices of goods from China rose 0.2 percent, while those from Latin America jumped 2.6 percent and imports from the Middle East increased 3.7 percent.
Export Prices
U.S. export prices gained 0.3 percent after rising 1.5 percent in March. Costs for farm exports dropped 2.2 percent, the first decline since May, while those of non-farm goods increased 0.6 percent.
Some foreign companies are raising U.S. prices to cover higher costs. B&C Speakers SpA, an Italian speaker-components maker, boosted prices by 12 percent in the U.S. to counteract a decline of the dollar against the euro. The increase has been accepted by the market, Chief Executive Officer Lorenzo Coppini said in an interview with Bloomberg Television on May 8.
The larger-than-expected gain followed a revised 2.9 percent rise in March that was higher than previously estimated, the Labor Department said today in Washington. Prices excluding petroleum increased 1.1 percent on higher costs for capital goods, industrial supplies and auto parts.
A decline in the dollar is making foreign goods more expensive, adding to inflation pressures as food and energy prices soar. The increase is one reason investors project Federal Reserve policy makers will hold interest rates unchanged in coming months, even as economic growth slows.
"Inflation remains an issue, especially with rates as low as they are,'' Maxwell Clarke, chief U.S. economist at IDEAGlobal in New York, said before the report.
Economists had forecast import prices would rise 1.6 percent in April, following an originally reported 2.8 percent gain a month earlier, according to the median of 51 projections in a Bloomberg News survey. Estimates ranged from no change to a gain of 2.4 percent.
Compared with a year earlier, costs of imported goods jumped 15.4 percent, the biggest rise since the index was first published in 1982. Excluding all fuels, import costs rose 6.2 percent in the 12 months ended in April, the largest increase since December 1988.
Import-Price Index
The import-price index is the first of three monthly gauges of inflation from the Labor Department. The government is scheduled to issue its report on consumer prices, the broadest measure, tomorrow. The cost of living probably rose 0.3 percent for a second month, according to a survey median.
Retail sales in the U.S. fell in April, led by a slump in auto purchases that masked stronger-than-forecast gains elsewhere, indicating rising energy bills and a faltering labor market haven't stopped Americans from shopping. Purchases dropped 0.2 percent last month after a 0.2 percent increase in March, the Commerce Department said.
The Labor Department's report on wholesale prices is due next week.
Import expenses may keep rising in coming months as fuel continues to climb and the dollar remains weak. The value of the dollar, down 9.6 percent in the 12 months ended in April against a trade-weighted basket of currencies from major trading partners, makes foreign-made goods more expensive.
Imported Petroleum
The cost of imported petroleum and petroleum products increased 4.4 percent after increasing 9.2 percent the prior month. Compared with a year earlier, prices were up 57.2 percent.
Prices of unfinished metals related to durable goods rose 7.1 percent last month, the report showed.
The government measures imported petroleum costs differently than for wholesale prices. The producer price index takes the price reported on the Tuesday of the week that includes the 13th of the month.
The price of imported crude is based on the average cost reported by the Energy Department for the entire month. The data for other imported fuel costs, such as heating oil and natural gas, is based on the average price over the first five days of the month.
The price of crude oil traded on the New York Mercantile Exchange closed at a record $125.96 a barrel on May 9, indicating their will be more pressure from energy costs in coming months.
A Lot of Concern
"There's still going to be a lot of concern about inflation both in financial markets and the Fed until commodity prices turn,'' Zach Pandl, an economist at Lehman Brothers Holdings Inc. in New York, said before the report.
Investors project the Fed will not cut the benchmark interest rate at the conclusion of its next Federal Open Market Committee meeting on June 25. That would be the first pause since the central bank started cutting rates in September.
The cost of imported capital goods increased 0.8 percent in April, today's report showed. The price of consumer goods rose 0.2 percent.
Expenses for imported automobiles, parts and engines gained 0.4 percent.
Prices of goods from China rose 0.2 percent, while those from Latin America jumped 2.6 percent and imports from the Middle East increased 3.7 percent.
Export Prices
U.S. export prices gained 0.3 percent after rising 1.5 percent in March. Costs for farm exports dropped 2.2 percent, the first decline since May, while those of non-farm goods increased 0.6 percent.
Some foreign companies are raising U.S. prices to cover higher costs. B&C Speakers SpA, an Italian speaker-components maker, boosted prices by 12 percent in the U.S. to counteract a decline of the dollar against the euro. The increase has been accepted by the market, Chief Executive Officer Lorenzo Coppini said in an interview with Bloomberg Television on May 8.
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