Prices of goods imported into the U.S. rose more than forecast in February, led by gains in crude oil and food.
The 1.4 percent increase in the import-price index exceeded the 0.9 percent median forecast in a Bloomberg News survey and followed a 1.3 percent rise in January, Labor Department figures showed today in Washington. Prices excluding fuel rose 0.3 percent. Food costs over the past 12 months posted the biggest gain since records began in 1977.
Expanding economies in Asia and Latin America are generating greater demand for raw materials, while turmoil in Libya has pushed up crude oil prices. So far, companies are limited in their ability to pass along those costs, helping explain why Federal Reserve officials meeting today are likely to stay the course on monetary policy to spur growth.
“The import price gains are all capturing the higher cost of energy and raw materials,” said Stephen Gallagher, chief U.S. economist at Societe Generale SA in New York, who forecast a 1.5 percent February increase. “Underlying price pressures aren’t doing much. The Fed will stay on hold.”
Projections in the Bloomberg survey of 51 economists ranged from a drop of 0.3 percent to a gain of 3 percent.
Separate figures showed manufacturing in the New York region accelerated in March at the fastest rate in nine months, a sign factories remain at the forefront of the economic expansion.
Empire State Index
The Fed Bank of New York’s general economic index rose to 17.5 from 15.4 in February. Economists projected an increase to 16.1, based on the median forecast in a Bloomberg News survey. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut.
Stock-index futures held earlier losses after Japanese Prime Minister Naoto Kan said the risk of further radiation leaks from an earthquake-damaged nuclear power plant are increasing. Contracts on the Standard & Poor’s 500 Index expiring in June slumped 2.5 percent to 1,257.7 at 9:15 a.m. in New York.
Compared with a year earlier, import prices increased 6.9 percent, the most since May 2010. They were forecast to rise 6.3 percent, according to the survey median.
The cost of imported petroleum increased 3.7 percent from the prior month, and was up 21 percent from a year earlier, the most since May 2010.
Prices Minus Fuels
Import prices excluding all fuels rose 3.6 percent from February 2010, the biggest gain in more than two years, partly a reflection of food costs.
Imported food was 0.8 percent costlier last month, and was up 16 percent from a year earlier.
Costs of imported automobiles, parts and engines rose 0.1 percent from the prior month. Consumer goods excluding vehicles showed a 0.2 percent gain, matching the rise in imported capital goods.
Increases in commodity prices in recent months mainly reflect “rising global demand for raw materials, particularly in some fast-growing emerging market economies, coupled with constraints on global supply in some cases,” Fed Chairman Ben S. Bernanke told lawmakers on March 1. That suggests a “temporary and relatively modest increase in U.S. consumer price inflation,” he said.
Fed officials at the end of their meeting today may signal they plan to complete the second round of bond purchases that’ll pump $600 billion into the financial system by June. Along with the so-called quantitative easing, they will probably maintain their policy of keeping the benchmark rate near zero.
The central bank’s preferred price gauge, which excludes food and fuel, rose 0.8 percent in January from a year earlier, matching December’s year-over-year gain, the smallest in five decades of record-keeping. Fed officials aim for long-run overall inflation of 1.6 percent to 2 percent.
Imported goods are also more expensive because of the weakening dollar. Since reaching a one-year high on June 7 of last year, the dollar has fallen 9 percent against a trade-weighted basket of major currencies.
Neiman Marcus Group Inc., a luxury retailer, is among companies seeing varied price pressures depending on where their products are manufactured. Europe accounts for the majority of the Dallas-based company’s imports, and the euro has been relatively stable compared with the dollar, according to Chief Executive Officer Karen Katz.
“Prices are not moving more than a little bit on goods coming out of Europe,” Katz said on a March 11 conference call. On indirect imports from China and Asia, bought through vendors who produce there, “we are seeing some price inflation in those areas due to commodity prices as well as big labor increases,” she said.
Today’s report showed the cost of goods from China rose 0.4 percent, while those from Japan climbed 0.5 percent. Goods from Latin America jumped 1.4 percent and those from the European Union increased 0.5 percent. Prices of Canadian imports jumped 2.3 percent, and goods from Mexico rose 1.1 percent.
U.S. export prices increased 1.2 percent after rising 1.3 percent the previous month, today’s figures showed. Prices of farm exports jumped 4.4 percent, the most in three months, while those of non-farm goods climbed 0.9 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 March 17. The Bloomberg survey median for those measures indicates inflation excluding volatile food and fuel expenses remains contained.