Washington: US import prices barely declined in September, with oil prices rebounding and the drag on prices from a weak global economy appearing to moderate, Labour Department data showed yesterday.
The 0.1 per cent decline in import prices might lay a bit of groundwork for an eventual interest rate increase by the Federal Reserve because a smaller downward push on inflation from imports could alleviate the Fed’s concerns that inflation is too low.
Non-oil import prices declined 0.2pc in September, which was half the pace of the declines registered in July and August.
Analysts had expected overall import prices to decline more, by 0.5pc, and the dollar strengthened slightly against a basket of currency following the data’s release.
The Fed held off from raising rates in September largely because a weak global economy and financial market turmoil had raised doubts within the US central bank that inflation would rise towards the Fed’s target as expected.
A separate report from the Commerce Department showed a rise in wholesale inventories that could point to unwanted inventory build-up, which could weigh on manufacturing and economic growth.
A surge in value of the US dollar last year, fuelled by expectations of a strengthening US economy would lead to higher interest rates, has been a factor pushing down inflation, evident by declines of non-oil import prices.
Fed chief Janet Yellen, who said late last month the Fed was likely to raise rates by year end, has argued that the disinflationary impact from imports was bound to fade and that US inflation would then trend higher.
Already, declines in oil prices have moderated after a late 2014 plunge, and prices for imported oil rose 1.1pc in September after declining sharply in August. Crude prices have actually trended higher over the last month. The dollar, which strengthened sharply in the second half of 2014, has weakened since March.
The Labour Department data also showed the price of imported consumer goods other than cars actually rose 0.1pc in September, the first gain since February. Imported car prices were flat.
Still, the data also pointed to ongoing weakness in global demand that is weighing heavily on US factories and other exporters. Export prices fell 0.7pc, more than the 0.2pc decline forecast by economists.