U.S. Import Prices Decreased More Than Anticipated (Update2)
By Courtney Schlisserman
March 16 (Bloomberg) -- Prices of goods imported into the U.S. fell in February more than anticipated, a sign there is little inflation pressure coming from abroad.
The import price index decreased 0.3 percent, the first decline in seven months, compared with a revised 1.3 percent January gain, Labor Department figures showed today in Washington. Prices excluding petroleum climbed 0.2 percent last month and were up 2.1 percent from a year earlier.
The dollar has climbed 2.7 percent against a basket of currencies from its biggest trading partners after reaching a one-year low on Dec. 1, easing price pressures from overseas goods. At the same time, companies may be reluctant to raise prices following the worst recession since the 1930s, giving the Federal Reserve, meeting today, reason to keep interest rates near zero.
“Core inflation seems to be in full retreat and that will be the case through most of 2010,” said Douglas Porter, deputy chief economist at BMO Capital Markets in Toronto. “Even if the recovery does build momentum, inflation will remain at full ebb.”
A report from the Commerce Department showed housing starts fell in February as record snowfall in parts of the country hampered construction. Builders broke ground on 575,000 homes at an annual rate last month, down 5.9 percent from January’s revised 611,000 pace that was higher than initially estimated. Building permits, a sign of future construction, decreased for a second month.
Stocks Rise
Stock-index futures held earlier gains following the reports. The contract on the Standard & Poor’s 500 Index rose 0.2 percent to 1,147.8 at 8:48 a.m. in New York. Treasury securities were little changed heading into the Fed’s announcement due at about 2:15 p.m.
Economists forecast import prices would fall 0.2 percent, after a previously estimated 1.4 percent gain in January, according to the median of 49 projections in a Bloomberg News survey. Estimates ranged from a drop of 1 percent to a 0.7 percent increase.
Oil’s Influence
Compared with a year earlier, prices rose 11.2 percent. A jump in petroleum costs since early last year is boosting year- over-year comparisons for inflation indicators.
Excluding all fuels, import prices increased 0.2 percent last month, the smallest gain since July. They were up 2 percent in the 12 months to February.
The import-price index is the first of three monthly price gauges from the Labor Department. The index of producer prices is scheduled to be released tomorrow and that of consumer prices is due March 18.
Fed policy makers are meeting today to discuss the direction of the benchmark overnight lending rate between banks. Central bankers have kept the rate near zero since December 2008 and have repeated at every meeting since March 2009 that they’ll keep it there for an “extended period.”
The cost of petroleum and petroleum products dropped 2.2 percent in February, the most since July. They were up 81 percent compared with a year earlier.
Dollar Gains
Helping to alleviate some of the pressure from rising commodity costs, the dollar strengthened against worldwide currencies in February. From the beginning of January to the end of February, it was up 1.6 percent relative to trading partners’ currencies.
Prices of imported food decreased 0.1 percent in February, compared with a 1.3 percent gain in January. They were up 5.4 percent from a year earlier.
Prices of imported automobiles, parts and engines were unchanged last month and increased 0.6 percent over the past 12 months. Costs for imported consumer goods excluding autos decreased 0.1 percent last month after rising 0.2 percent.
The cost of goods from China decreased 0.1 percent, the same as imports from Japan, the report showed. Goods from Latin America fell 0.5 percent.
U.S. export prices decreased 0.5 percent after climbing 0.7 percent in January. Prices of farm exports fell 3.8 percent, while those of non-farm goods decreased 0.2 percent last month.
Some companies are planning on raising prices. Huntsman Corp. may boost prices for some types of polyurethanes, Chief Executive Officer Peter Huntsman said Feb. 19 in an interview.
“If you see strength in the economy in Western Europe and the U.S. over and above what we are at right now, there will be an opportunity to raise prices because there is just not much inventory out there,” Huntsman said.
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