US import prices plunge on lower petroleum costs
WASHINGTON: US import prices tumbled in December for a sixth straight month as the cost of petroleum and a range of other goods fell further, suggesting a tame inflation environment could persist in the near term.
The Labor Department said on Thursday import prices decreased 1.2 percent last month, the largest decline since August, after a revised 0.5 percent drop in November.
Import prices have dropped in 16 of the last 18 months, a sign that they will continue to weigh on consumer goods prices. Economists had forecast import prices declining 1.4 percent after a previously reported 0.4 percent fall in November.
For all of 2015, import prices fell 8.2 percent, the largest calendar-year decrease since 2008. A strong dollar and a sharp drop in oil prices are keeping imported inflation subdued, leaving overall inflation well below the Federal Reserve’s 2 percent target.
With the dollar continuing to rise against major currencies and oil prices hovering at 12-year lows, inflation will probably remain benign for a while. Economists say weak inflation together with slowing domestic and global growth could make the Fed cautious about increasing interest rates at its March policy meeting, despite tightening labor market conditions.
The US central bank last month raised its benchmark overnight interest rate by a quarter of a percentage point to between 0.25 and 0.50 percent, the first rate hike in nearly a decade. In November, imported petroleum prices plunged 10 percent, the biggest fall since August, after sliding 3.6 percent in November. Import prices excluding petroleum slipped 0.4 percent after falling 0.3 percent in November.
The dollar’s 21.7 percent appreciation against the currencies of the United States’ main trading partners over the last 20 months has made imported goods cheaper. Imported food prices dipped 0.1 percent last month after a similar fall in November. Prices for industrial supplies excluding petroleum fell 1.4 percent. Prices for imported capital goods slipped 0.3 percent and prices for imported automobiles dipped 0.1 percent. The report also showed export prices dropping 1.1 percent last month after sliding 0.7 percent in November. Export prices fell 6.5 percent in 2015, the largest calendar-year drop since the index was first published in 1983.