Import Tabs Hit A DowndraftGene Koretz
The dollar's recent upsurge promises to lower the temperature in one of the few areas where inflation had been heating up this year: prices of U.S. imports, which account for around 30% of domestic demand for goods.
Economist Maury N. Harris of PaineWebber Inc. notes that import prices surged at an 8.2% annual rate in the first five months of this year, contributing to an acceleration in consumer prices in the first half. And a big factor in this surge, he observes, was a drop of nearly 7% in the dollar's value against the currencies of America's 20 leading trading partners.
In June, however, import prices actually fell for the first time in nearly a year--with every product and region registering a decline. And with the dollar up appreciably since then, the slowing pace of import inflation seems likely to continue.