July 13 (Bloomberg) -- Prices of goods imported into the U.S. rose for a fifth straight month in June on higher fuel costs, underscoring concerns among Federal Reserve policy makers that inflation remains a risk.

The 1.0 percent increase in the import price index, which was bigger than forecast, followed a 1.1 percent gain in May, the Labor Department reported today in Washington. Prices excluding petroleum rose 0.2 percent after climbing 0.5 percent.

The increase reflects near-record fuel costs, faster growth abroad and a weaker dollar, developments that make it more likely U.S. companies will raise prices, economists said. Fed Bank of Philadelphia President Charles Plosser said this week that an expected slowing in inflation is ``far from a certainty.''

``We're seeing continued increases even in non-petroleum import costs, so clearly the price pressures are there,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte, North Carolina, which correctly forecast the rise. ``This doesn't change the Fed's outlook, but it does keep them watching'' for inflation.

Economists forecast import prices would rise 0.7 percent, after a previously reported 0.9 percent increase, according to the median of 47 estimates in a Bloomberg News survey. Forecasts ranged from a decline of 0.5 percent to a 1.4 percent gain.

Retail Sales

U.S. retail sales fell in June by the most in almost two years, a separate government report showed today. The bigger- than-forecast 0.9 percent decrease followed a revised 1.5 percent gain the prior month, the Commerce Department said. Purchases excluding automobiles fell 0.4 percent, the most since September.

Treasuries gained after the retail sales report raised concern that near-record gasoline prices and falling home values are taking a toll. The yield on the benchmark 10-year note fell to 5.09 percent at 9 a.m. in New York, from 5.12 percent late yesterday.

The import-price index is the first of three monthly price gauges from the Labor Department. The government is scheduled to release its measure of wholesale prices on July 17 and the consumer price index on July 18.

Compared with a year earlier, prices of imported goods rose 2.3 percent in June, after a 1.4 percent year-over-year increase in May. Excluding petroleum, prices increased 2.6 percent in the past 12 months.

Petroleum Costs

The price of imported petroleum and petroleum products jumped 4.7 percent in June after gaining 3.7 percent the prior month. Prices were up 2.1 percent from the same time a year earlier.

Crude oil futures on the New York Mercantile Exchange rose to an average $67.56 a barrel last month from $63.56 in May.

A decline in the value of the dollar is making imports more expensive. The dollar has fallen almost 8 percent since the beginning of last year against a trade-weighted basket of currencies of major U.S. trading partners.

The cost of imported capital goods increased 0.2 percent last month, the first gain this year, while dropping 0.1 percent from a year earlier.

Prices of imported automobiles, parts and engines rose 0.1 percent for a third month, the biggest three-month gain since August. Costs for imported consumer goods excluding autos were unchanged for a third month.

Retail Competition

Increased competition has prompted some overseas companies to lower prices even as the dollar falls.

Sony Corp., the world's biggest game-console maker, this week cut the price of the PlayStation 3 in the U.S. by $100, or 17 percent, after sales trailed Nintendo Co.'s Wii and Microsoft Corp.'s Xbox 360.

The Fed last month kept the benchmark U.S. interest rate at 5.25 percent, where it has been for a year.

``Readings on core inflation have improved modestly in recent months,'' the Federal Open Market Committee said June 28. ``However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated.''

The Fed's Plosser said that he's ``not wholly convinced yet that we are on a downward moderation'' trend for inflation. He made the remarks after a July 11 speech to the European Economics and Financial Centre in London.

Prices of goods from China rose 0.3 percent for the second straight month in June, the strongest back-to-back gain on record.

Prices of U.S. exports gained 0.3 percent after rising 0.2 percent in May. Prices of farm exports increased 2.9 percent, while those of non-farm exports ticked up 0.1 percent.

To contact the reporter on this story: Joe Richter in Washington jrichter1@bloomberg.net

Last Updated: July 13, 2007 09:17 EDT