Bloomberg News

U.S. Import Prices Unexpectedly Rose on Petroleum, Metals

October 14, 2011

(Updates with retail sales in sixth, seventh paragraphs.)

Oct. 14 (Bloomberg) -- Prices of goods imported into the U.S. unexpectedly rose in September, reflecting higher costs of crude oil that have since receded and a jump in metals.

The 0.3 percent gain in the import-price index followed a revised 0.2 percent decrease in August, Labor Department figures showed today in Washington. Economists projected a 0.4 percent September drop, according to the median forecast in a Bloomberg News survey. Prices excluding fuel rose 0.2 percent.

Slower growth from Europe to Asia and a strengthening dollar may help limit gains in the cost of goods and materials from abroad. At the same time, a lack of job creation is holding down wages, the biggest expense for companies.

“Even with rising import prices, it’s not an indication of inflationary pressures building,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “Slack in the labor market and a sluggish economy are dampening corporate pricing power.”

Projections for import prices ranged from a decrease of 2 percent to a 0.4 percent increase, according to the Bloomberg survey of 50 economists.

Retail sales rose more than forecast in September, easing concern slumping confidence and scant hiring will derail the biggest part of the economy, another report showed today.

The 1.1 percent advance, the biggest since February, followed a 0.3 percent gain for August, a stronger performance than previously estimated, according to the Commerce Department in Washington. The median forecast of 85 economists surveyed by Bloomberg called for a 0.7 percent rise in purchases last month.

Last Year

Compared with a year earlier, import prices rose 13.4 percent, today’s report showed, up from a 13 percent increase in the 12 months ended in August.

The cost of imported petroleum climbed 0.3 percent from the prior month and was up 46 percent from a year earlier. The price of imported unfinished metals jumped 0.9 percent, led by gold and other precious metals.

Import prices excluding all fuels increased 5.5 percent from September 2010.

Imported food was 0.5 percent more expensive last month. Costs of imported automobiles rose 0.3 percent and were up 2.5 percent from September 2010, the biggest 12-month increase since November 1991.

Consumer Goods

Consumer goods excluding vehicles showed a 0.3 percent gain and were up 2.4 percent over the past 12 months. Costs for clothing made overseas were up 11.5 percent last month from September 2010.

Levi Strauss & Co. is bracing for tepid consumer spending this holiday season after back-to-school shoppers in the U.S. balked at higher prices on its namesake jeans and Dockers pants following gains in cotton prices earlier this year.

“Price increases in the value channel were much harder on the consumer,” Chief Executive Officer Blake Jorgensen said in an interview this week. Regular prices of those jeans were $30 to $50 in the quarter, after jumping by $5 to $15 to make up for higher costs, he said.

A strengthening of the U.S. dollar over the last couple months may make foreign goods cheaper in the U.S. while American-made goods become more expensive overseas. Since late July, the dollar has gained about 6.2 percent against a basket of currencies of major trading partners after falling 9.1 percent in the prior 12 months.

Imported goods from China increased 0.2 percent, and were up 3.8 percent over the past 12 months, the biggest year-over- year gain since October 2008.

Bernanke on Inflation

“Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks,” Fed policy makers said Sept. 21 after their most recent monetary policy meeting. “Longer-term inflation expectations have remained stable.”

Core prices have moved up on a year-on-year basis while remaining below the Fed’s target range. The Fed’s preferred price gauge, which excludes food and fuel, rose 1.6 percent in August from a year earlier. Fed policy makers aim for long-run overall inflation of 1.7 percent to 2 percent, according to their June forecast.

U.S. export prices increased 0.4 percent after increasing 0.5 percent the previous month, today’s figures showed. Prices of farm exports increased 1.6 percent, while those of non-farm goods rose 0.3 percent.

The import-price index is the first of three monthly price gauges from the Labor Department. Data on producer prices come out Oct. 18, followed the next day by the consumer-price index.

--With assistance from Alex Kowalski in Washington. Editor: Vince Golle

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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