Bloomberg News

U.S. Import Prices Jumped 1.3% in March on Fuel, Materials

April 11, 2012

Prices of goods imported into the U.S. rose more than forecast in March, reflecting higher costs for fuel and industrial materials such as metals.

The 1.3 percent gain in the import-price index was the biggest since April 2011 and followed a revised 0.1 percent drop in February that was previously reported as an increase, Labor Department figures showed today in Washington. Economists projected the March gauge would increase 0.8 percent, according to the median forecast in a Bloomberg News survey. Prices excluding fuel climbed 0.5 percent, also the most in 11 months.

Even with the jump from a month earlier, import prices over the last year posted the smallest gain since November 2009, indicating slower global growth may help temper inflation pressures. Federal Reserve policy makers said last month that higher fuel prices will prove temporary, allowing them to stick to plans to keep interest rates low at least until late 2014.

“Given what’s been driving import prices, which is the oil component, you’re likely to see a slight moderation or even greater moderation going forward,” said Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York, who correctly forecast the March figure. “Import prices were certainly a problem for businesses in the last three months, but we’ve seen those pressures ease.”

Prices of imported consumer goods excluding autos were unchanged for a second month in March.

Projections for import prices ranged from a decrease of 0.3 percent to an increase of 1.3 percent, according to the Bloomberg survey of 48 economists. February import prices were initially reported as a 0.4 percent gain.

Stock Futures

Stock-index futures rose after Alcoa Inc., the biggest U.S. aluminum maker, posted a surprise first-quarter profit. The contract on the Standard & Poor’s 500 Index expiring in June added 0.8 percent to 1,368.1 at 8:35 a.m. in New York.

Compared with a year earlier, import prices rose 3.4 percent, today’s report showed. They rose 5 percent in the 12 months ended in February.

The cost of imported petroleum and products jumped 4.3 percent in March, the most since April 2011, from the prior month and was up 9.6 percent from a year earlier.

While crude oil prices reached the highest level in almost a year in mid-March, they have since fallen, signaling future relief for the country’s imported energy bill. Brent oil for May delivery has dropped 5 percent through yesterday’s close since reaching a peak this year of $126.22 a barrel on March 13.

Food Prices

Imported food was 1.8 percent more expensive last month, today’s report showed. In February, imported food costs dropped 2.8 percent.

Prices for imported automobiles and parts rose 0.3 percent after no change and were up 3 percent from March 2011. The cost of imported capital goods rose 0.2 percent.

The price of imported industrial supplies and materials minus fuel rose 1.7 percent, the biggest gain in a year, led by metals, paper and building materials.

Fed officials have indicated they see inflation moderating as the surge in energy costs wanes.

“The recent increase in oil and gasoline prices will push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate,” the Federal Open Market Committee said in the minutes of its March 13 meeting.

Federal Reserve

At the same time, the central bank officials indicated they will probably hold off on more monetary accommodation unless prices rise more slowly than their 2 percent target or the economic expansion falters, according to the minutes. Their preferred price gauge, tied to consumer spending and issued by the Commerce Department, rose 2.3 percent in the year ended in February.

Cheaper agriculture and materials may reduce pressure on companies to raise prices on American consumers facing an 8.2 percent unemployment rate. The Thomson Reuters/Jeffries CRB commodity index was 300.45 yesterday, down 7.8 percent from a five-month high reached Feb. 24.

“It’s possible that by the end of the year inflation will be much more benign,” Michael Schlotman, chief financial officer at Kroger Co. said during a March 21 conference. The largest U.S. grocery chain, based in Cincinnati, is experiencing 5 percent inflation, a rate that should drop to 2 percent this year, Schlotman said. “There are some positive signs out there, but we just don’t see anything at this point that would cause us to think we’ll go to deflation.”

U.S. Dollar

A pickup in the value of the U.S. dollar since the third quarter of 2011 may also help make imported goods less expensive. The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against that of six major trade partners including the euro and yen, has increased 8.7 percent since July 26 through yesterday.

Slower economic growth across the globe will probably help relieve pressure on commodity prices as cooling economies in the euro area and tempered growth in emerging markets like China and India reduces demand.

The cost of imported goods from China was unchanged in March and were up 2.7 percent over the past 12 months.

Imported goods from Japan were also little changed, while the cost of goods from the European Union climbed 0.9 percent, the most since May. Goods from Mexico rose 1.1 percent.

U.S. export prices increased 0.8 percent in March, today’s report also showed, after rising 0.4 percent the previous month. Prices of farm exports climbed 2.7 percent and those of non-farm goods increased 0.5 percent.

The import-price index is the first of three monthly price gauges from the Labor Department. Data on producer prices are released tomorrow, followed the next day by the consumer-price index.

To contact the reporter on this story: Alex Kowalski in Washington at

To contact the editor responsible for this story: Christopher Wellisz at

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