Prices for foreign goods shipped to the U.S. rose for the fifth consecutive month in April, signaling broader-based inflation pressure even though oil prices have cooled.
Import prices increased 4.1% in April from a year earlier, the Labor Department said Wednesday. While the movement of import prices is heavily influenced by oil prices, Wednesday's report showed an increase driven by a broader base of goods.
Non-petroleum import prices, up 1.1% from a year earlier, experienced the largest yearly increase since March 2012, driven by rising costs for nonfuel industrial supplies, products such as building materials, metals and motor vehicles.
The data suggest an improving global economy and stronger demand are putting some mild upward pressure on inflation in the U.S. A softer dollar, which is down 2.6% so far this year, could be one contributing factor.
The import-price index is one of several gauges the Federal Reserve studies to understand how quickly prices for products are rising in the U.S. The Fed's preferred inflation gauge, the Commerce Department's personal-consumption-expenditures index, advanced 1.8% year over year in March. Signs of firming inflation give the central bank leeway to consider raising its benchmark rate. The Fed held interest rates steady at its latest meeting but is expected to lift rates two more times this year.
"There has been this doubt in the market that inflation is going to continue to be at or near the Fed's 2 % target," said Thomas Simons, a Jefferies economist. "[Wednesday's] import price data gives you some confidence there's some pressure outside of just oil."
Wednesday's report also showed prices for U.S. exports increased 0.2% in April from a month earlier. From a year earlier, export prices were up 3%.
The Labor Department report on import and export prices can be accessed here.
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(END) Dow Jones Newswires
May 10, 2017 15:28 ET (19:28 GMT)