U.S. Import Prices Decreased 0.5% in April on Cheaper Fuel

Prices of goods imported into the U.S. fell more than forecast in April, reflecting lower costs for fuel.

The 0.5 percent decline in the import-price index followed a revised 1.5 percent advance in March, Labor Department data showed today in Washington. Economists projected the gauge would drop 0.2 percent, according to the median forecast in a Bloomberg News survey. Prices minus fuel climbed 0.1 percent.

Slower global growth stemming from Europe and China may further temper inflation pressures in the coming months. Federal Reserve policy makers have said that higher fuel prices will have a temporary effect on the world’s largest economy, allowing central bankers to stick to a plan to keep interest rates low at least until late 2014.

“Inflation is not an immediate concern,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “The Fed is betting that energy prices will have only a temporary impact, and so far the bet is paying off. Oil prices have fallen sharply this month, taking the edge off headline inflation.”

Compared with a year earlier, import prices rose 0.5 percent in April, the smallest gain since a decrease in October 2009, today’s report showed. They advanced 3.6 percent in the 12 months ended in March.

Another report from the Labor Department today showed first-time claims for jobless benefits fell last week to a one- month low, helping allay concern that the labor market may suffer an extended setback.

Jobless Claims

Jobless claims dropped by 1,000 to 367,000 in the period ended May 5, in line with the median forecast in a Bloomberg survey and the lowest since the end of March. The number of people continuing to collect unemployment benefits was the smallest since July 2008.

Projections for import prices ranged from a decrease of 1.1 percent to an increase of 1.3 percent, according to the Bloomberg survey of 50 economists.

The cost of imported fuels decreased 2.1 percent in April from the prior month. Prices were down 1.7 percent from April 2011, the first decrease since October 2009.

While crude oil prices reached their highest level in almost a year in mid-March, they have since fallen, suggesting a further decline in the country’s imported energy bill. Brent oil for May delivery has dropped about 10 percent through yesterday’s close since reaching a peak this year of $126.22 a barrel on March 13.

Bernanke on Oil

Fed Chairman Ben S. Bernanke said on April 25 that a rise in gasoline prices “has created a temporary bulge” in inflation that’s likely to “pass through the system.”

Imported food was 0.1 percent more expensive last month, today’s report showed. In March, imported food costs climbed 1.8 percent.

Prices for imported automobiles and parts rose 0.4 percent, the most since June. The cost of imported capital goods was little changed from the previous month.

Cheaper agriculture and materials may reduce pressure on companies to raise prices on American consumers facing an 8.1 percent unemployment rate. The Thomson Reuters/Jeffries CRB commodity index was 294.83 yesterday, down 9.5 percent from a five-month high reached Feb. 24.

Companies like the Cheesecake Factory Inc. (CAKE), which operates casual dining restaurants in the U.S., said it doesn’t foresee higher food costs this year.

Commodity Prices

“We’re expecting less commodity cost inflation in 2012 than what we were expecting entering the year,” Chief Financial Officer Douglas Benn said on a May 8 conference call.

A gain in the value of the U.S. dollar over the past 12 months may make imported goods less expensive going forward. The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against that of six major trade partners including the euro and yen, has risen about 7 percent since May 9, 2011.

Also, a slowdown in global growth may help alleviate pressure on commodity prices as cooling economies in the euro area and tempered growth in emerging markets like China reduce demand.

The cost of imported goods from China decreased 0.3 percent in April, the first decline since June 2010, today’s figures showed.

Imported goods from Japan fell 0.4 percent, the most since September 2008, while the cost of goods from the European Union dropped 0.1 percent. Goods from Mexico decreased 0.5 percent.

U.S. export prices rose 0.4 percent in April, the smallest gain in three months, today’s report showed. Prices of farm exports climbed 2 percent and those of non-farm goods increased 0.2 percent.

The import-price index is the first of three monthly price gauges from the Labor Department. Data on producer prices are released tomorrow, followed by the consumer-price index on May 15.

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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

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