Import Prices in U.S. Rose 1.5% in January, Led by Fuels, Food

The cost of goods imported into the U.S. rose more than forecast in January, boosted by higher prices for commodities such as fuels and food.

The 1.5 percent increase in the import-price index followed a revised 1.2 percent gain in December, Labor Department figures showed today in Washington. Economists projected a 0.8 percent increase for January, according to the median estimate in a Bloomberg News survey. Excluding food and fuel, import prices climbed 0.6 percent.

A weaker dollar along with rising demand from emerging markets such as Brazil and China have pushed up prices of oil, food and building materials. With joblessness at 9 percent, U.S. companies have limited ability to pass along higher costs to consumers, one reason why the Federal Reserve says it plans to stick to its program of buying assets through mid-year.

“The pass-through, certainly from commodities to core consumer prices, is pretty small,” Jim O’Sullivan, global chief economist at MF Global Inc. in New York, said before the report. “From the Fed’s perspective, inflation expectations are the main channel through which higher commodity prices can lead to higher inflation, and inflation expectations are pretty tame.”

Projections for gains in January import prices in the Bloomberg News survey of 53 economists ranged from 0.2 percent to 1.5 percent.

From a year earlier, import prices increased 5.3 percent in January, compared with a 5.1 percent gain in December. Import prices were forecast to rise 4.4 percent in January from a year earlier, according to the survey median.

Petroleum Costs

The cost of imported petroleum rose 3.4 percent in January from the prior month and gained 18.5 percent over the past four months.

Excluding all fuels, import prices were up 0.8 percent from a year earlier.

Prices of imported food increased rose 2.6 percent last month, and were up 14.8 percent from a year earlier.

Costs of imported automobiles, parts and engines rose 0.5 percent from the prior month, the largest monthly gain since December 2007. Prices of consumer goods excluding vehicles climbed 0.3 percent after no change.

Imported capital goods prices were up 0.2 percent.

The import-price index is the first of three monthly price gauges from the Labor Department. Producer prices are due tomorrow and the consumer-price index on Feb. 17.

An unemployment rate that’s held above 9 percent since May 2009 is also restraining labor costs. Persistent joblessness and a declining inflation rate prompted Fed policy makers on Nov. 3 to announce a plan to purchase of $600 billion in Treasury securities by the end of June to bring down long-term borrowing costs.

Dollar Weakens

Since reaching a one-year high on June 7, the dollar has fallen about 8.1 percent against a trade-weighted basket of major currencies, making imported goods more expensive.

Chipotle Mexican Grill Inc., which owns and operates quick- serve Mexican restaurants across the U.S., is seeing its costs for imported tomatoes, green peppers and tomatillos rise, along with beef and cheese. Still, the company has been reluctant to raise prices.

“Commodity inflation has continued to push our food costs higher in 2011 already, and we expect continued inflationary pressure on many of our ingredients,” said John R. Hartung, chief financial officer at Denver-based Chipotle in a Feb. 10 earnings teleconference. “We plan to hold off on any menu- pricing decisions until later in the year, which will allow us to see how inflation plays out on a sustained basis and allow us to see how consumers react to price increases from other restaurants and grocers.”

Goods From China

The cost of goods from China rose 0.3 percent in January, while those from Japan increased 0.4 percent, today’s report showed. Goods from Latin America climbed 2.2 percent, and those from the European Union increased 1 percent. Prices of Canadian imports increased 2.8 percent, and goods from Mexico were up 1.2 percent.

U.S. export prices increased 1.2 percent in January after rising 0.6 percent in the previous month, today’s figures showed. Prices of farm exports advanced 3.2 percent, while those of non-farm goods increased 0.9 percent.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net