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Import Prices in U.S. Climbed in February as Energy Costs Jumped

The cost of goods imported into the U.S. climbed in February by the most in six months, reflecting a jump in energy expenses that is now receding.

The 1.1 percent increase in the import-price index followed a 0.6 percent gain in the prior month, Labor Department figures showed today in Washington. The median forecast of 43 economists in a Bloomberg survey called for a 0.6 percent advance. Prices dropped 0.3 percent over the past 12 months.

The increase in import costs is unlikely to be sustained as global markets such as Europe remain weak, limiting demand for commodities including oil. American companies also will have little scope to raise prices as they compete with overseas manufacturers to attract customers, helping to keep overall inflation in check.

“We had a pretty substantial rise in oil prices, but we’ve come back,” Tom Simons, an economist at Jefferies LLC in New York, said before the report. His team ranked third among forecasters of import prices over the past two years, according to data compiled by Bloomberg. “Outside of oil, there really isn’t a lot going on with import prices. They’re pretty stable excluding the volatility due to oil.”

Projections in the Bloomberg survey ranged from a drop of 0.2 percent to a gain of 2.1 percent. Compared with a year earlier, import prices were forecast to decline 0.7 percent.

Federal Reserve policy makers project prices will stay within their goal. Inflationary pressures were “modest,” the central bank said in its Beige Book released March 6. “Most district contacts did not plan to increase prices.”

Imported Oil

The cost of imported petroleum increased 5.2 percent from the prior month, the biggest advance since August.

Oil prices have shown large swings this year. Brent crude traded on the ICE Futures Europe exchange in London at an average of $112.32 a barrel in January, jumped to $116.07 a barrel in February, and dropped to around $110 a barrel as of yesterday.

Excluding all fuels, import prices were little changed in February from the prior month. They also showed little movement from February 2012.

Costs of imported automobiles were little changed from the prior month. Consumer goods excluding vehicles showed a 0.1 percent gain. The price of imported capital goods was down 0.1 percent in February from the prior month and fell 0.4 percent over the past 12 months, the biggest year-to-year decrease since July 2010.

Dollar Climbs

Import costs may remain restrained as concern about Europe’s woes drives investors to prefer the safety of the dollar. Fed data show the currency climbed 1.7 percent from the end of last year through March 8, when measured against a trade- weighted basket of currencies from its biggest trading partners. The current level is still down from last year’s peak reached on June 1.

Weak demand overseas and contained raw-materials costs make it unlikely foreign manufacturers will be able to raise prices of goods sent to the U.S. Michelin & Cie. (ML), Europe’s largest tiremaker, said sales volume and earnings probably won’t grow this year as a recession that hurt the region’s car and truck industries held back profits in 2012.

“When it comes to raw materials, we mentioned that it should still be positive for us this year, notably in the first half,” Jean-Dominique Senard, chief executive officer of Clermont-Ferrand, France-based Michelin, said on a Feb. 12 earnings conference call with analysts.

Other Gauges

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 March 15.

Today’s report showed the cost of goods from China rose 0.1 percent, the first increase since February 2012. The price of imports from Japan dropped 0.4 percent, the most since September 2008. Goods from Latin America climbed 2.1 percent and those from the European Union increased 0.7 percent. Prices of Canadian imports climbed 1.5 percent, and goods from Mexico cost 1.3 percent more.

U.S. export prices increased 0.8 percent after advancing 0.3 percent the previous month, today’s figures showed. Prices of farm exports rose 2 percent, while those of non-farm goods were up 0.6 percent.

To contact the reporter responsible for this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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

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