U.S. import prices unexpectedly rose in December after falling for five straight months, buoyed by higher gas and food prices, suggesting the Federal Reserve’s battle against inflation will remain protracted even as consumer prices cool.
The U.S. Department of Labor released data on Friday (13th) that the U.S. import price index rebounded to 0.4% in December last year from a drop of 0.7% in November last year, far higher than the -0.9% expected by the market; The monthly import price index rose to 3.5 percent after rising 2.7 percent in November last year.
Christopher Rupkey, chief analyst at FWDBONDS, said the Fed’s fight against inflation may take longer than the market expects because the bullishness of rising prices for imported goods has turned into a headwind.
Looking at the details of the data, the price of imported fuel in the United States in December last year increased by 0.6% after a 3.7% decline in November last year, the first monthly increase since June 2022, reflecting a 59.5% increase in natural gas prices offsetting the impact of a 2.7% drop in oil prices The price of imported food increased by 0.4%.
Growth in core import prices rebounds
Excluding fuel and food, the core import price index rebounded 0.4% in December last year, the first monthly increase since April 2022. The core import price index fell 0.6% in November last year.
Core import prices rose in December even as the dollar strengthened against the currencies of the U.S.’s main trading partners, with the dollar gaining 5.6 percent on a trade-weighted basis last year, but the greenback has had a rough start to the year that could push core import prices higher.
Daniel Silver, an analyst at JP Morgan Chase & Co. in New York, said that future inflation trends will be partly affected by the rise and fall of the dollar, and the recent depreciation of the dollar may put some upward pressure on import prices.
In addition, the prices of imported capital goods and automobiles also rose. Prices of consumer goods excluding autos rose 0.2%, driven by a combination of consumer durables and nonmanufactured consumer goods. Affected by the drop in the price of chemical products, the cost of imported goods from China fell by 0.1%, and the price of imports from Canada and Mexico also fell, but the price of imported goods from Japan rose slightly by 0.1%.
Export price index fell 2.6%
At the same time, the U.S. export price index fell 2.6% in December last year, far less than market expectations of -0.5%, the sixth consecutive month of decline, and the previous value was revised to -0.4%. Export prices of agricultural products fell 2.4 percent, dragged down by falls in prices of corn, soybeans, meat and wheat, while vegetable and fruit export prices rose.
Nonfarm export prices fell 2.7 percent, reflecting lower prices for industrial raw materials and materials that offset higher prices for capital goods, motor vehicles and nonfarm food. The U.S. export price index rose 5% in December last year, the smallest increase since January 2021, after rising 6.1% in November.
