U.S. Import Prices Fall 0.3% in April

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The FINANCIAL — Prices of imported goods fell last month, suggesting weak global demand and a stronger dollar continue to hold back U.S. inflation, according to Nasdaq.

Import prices declined a seasonally adjusted 0.3% in April from March, the Labor Department said on May 13. Prices have fallen for 10 consecutive months and are down 10.7% over the past year.

Economists surveyed by The Wall Street Journal had expected a 0.3% monthly increase in import prices.

Weak import prices have weighed on U.S. inflation, largely reflecting soft global demand and falling prices for gasoline and other petroleum products. The last time import prices increased was in June 2014.

But the latest weakness is also a sign of a stronger U.S. dollar, which makes foreign goods and services relatively cheaper for U.S. consumers.

The price of imported oil, which had brought down the overall index since last summer, picked up last month. Petroleum import prices rose 1%.

Non-petroleum imports fell 0.4% from a month earlier and 2.7% from a year ago, the largest 12-month decline since October 2009.

The most significant monthly declines in April: a 7% drop in natural gas, a 0.9% decline in foods, feeds and beverages, a 1.1% drop in durable industrial supplies and a 2% drop in unfinished metals. Auto-import prices were unchanged from March, but fell 1.9% from a year ago. The year-ago decline was the biggest since Commerce started publishing the index in June 1981.

The price of U.S. exports, meanwhile, fell 0.7% in April from March.

U.S. inflation has been subdued in recent years, even before global oil prices began to tumble in mid-2014.

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Many economists expect inflation will remain low in the coming months but slowly pick up later this year as downward pressures continue to ease. Federal Reserve officials have said they want to see inflation moving toward their 2% target before raising interest rates.

The Commerce Department’s personal consumption expenditures index–the Fed’s preferred measure of inflation-has undershot the central bank’s inflation goal for nearly three years.

In a statement following their latest policy meeting, Fed officials reiterated that they expect inflation to gradually return to their 2% objective “as the labor market improves further and the transitory effects of declines in energy and import prices dissipate.”

 

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