Your Economy (No Politics)

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U.S. March Import Prices Fall 0.4%; Fall 0.3% Excluding Oil
Bob Willis in Washington


April 13 (Bloomberg) -- Prices of goods imported into the U.S. fell in March, held back by cheaper natural gas, oil and industrial supplies. Excluding oil, import prices also fell.

Import prices fell 0.4 percent after declining 0.5 percent the previous month, the Labor Department said today in Washington. Excluding petroleum, prices fell 0.3 percent. Prices excluding all fuels rose 0.1 percent.

Less expensive consumer goods from China and other Asian countries are helping to restrain prices outside of energy, economists said. Federal Reserve Bank of Dallas President Richard Fisher said this week he hasn't seen evidence that companies are able to pass along increases in the prices of metals and other commodities to customers.

``There is just not much motion in import prices,'' Kevin Harris, chief economist at Informa Global Markets in New York, said before the report. ``In the goods sector, it's very hard to pass on price increases for finished goods.''

Import prices were forecast to rise 0.2 percent, the median estimate in a Bloomberg News survey of economists. Imports account for about 14 percent of all goods and services purchased in the U.S.

Prices for all imported goods last month were 4.5 percent higher than in March 2005, compared with a 7.2 percent year-over- year increase in February. Excluding petroleum, prices were up 1.1 percent in the last 12 months.

The figure excluding petroleum includes natural gas, which fell 13 percent last month after declining 20.3 percent in February. From a year earlier, natural gas rose 19 percent.

Petroleum Products

The price of imported petroleum and petroleum products fell 0.7 percent last month, after falling 0.2 percent the previous month, today's report showed. Compared with a year earlier, the price of imported petroleum products was up 22.6 percent.

Compared with March 2005, prices excluding all fuels were up 0.7 percent, a moderate gain that is helping to keep a lid on domestic inflation.

The Federal Reserve on March 28 raised its overnight lending rate a quarter point for a 15th consecutive time, to 4.75 percent, to keep inflation at bay. The Fed said further increases may be needed.

The Fed's preferred inflation measure, the personal consumption expenditures price index, rose 3.2 percent for the 12 months ending February. Minus food and energy, the index rose 1.8 percent, near the upper end of the 1 percent to 2 percent range that Fed Chairman Ben S. Bernanke says is acceptable.

``My view is that the economy is on a very solid track,'' St. Louis Federal Reserve Bank President William Poole said in an interview on April 7. ``As long as the inflation rate stays where it is, there's no reason not to have the economy continue to grow.''

Dollar Gains

A stronger dollar has helped make imported goods less expensive, and has put pressure on U.S. companies to limit price increases. The dollar rose 3.5 percent last year against a trade- weighted basket of currencies from the nation's trading partners, according to Fed data.

The import price index is the first of three monthly price measures. The government will report its March producer price index on April 18, followed a day later by the consumer price index for the same month. Economists surveyed by Bloomberg News forecast a 0.4 percent rise in the consumer price index for March after a 0.1 percent advance in February.

Prices for industrial supplies excluding petroleum fell 1.3 percent. The cost of imported capital goods fell 0.1 percent after rising 0.1 percent. Those prices are down 1.5 percent from a year earlier.

Prices for imported consumer goods excluding autos decreased 0.2 percent. Prices of imported automobiles, parts and engines were unchanged.

Auto Makers

U.S. and foreign carmakers are battling for market share by cutting prices and offering incentives. Toyota Motor Corp. priced the new gasoline-electric version of its best-selling Camry sedan $5,000 less than Honda Motor Co.'s rival Accord Hybrid, Toyota's U.S. unit said March 27.

The 2007 Camry Hybrid goes on sale in May with a base price of $25,900, Toyota's U.S. unit said. Toyota increased U.S. sales by 6.9 percent in March to a record.

Today's report showed prices of goods from China fell 0.1 percent. Compared with a year ago, prices were down 0.4 percent. Prices of textiles and related items, a major export for China, were unchanged.

Prices of goods from Japan were unchanged. Products from the European Union fell 0.2 percent. Canadian goods prices fell 1.8 percent.

Prices of U.S. products exported to other countries rose 0.2 percent after rising 0.1 percent. Prices for farm exports fell 0.2 percent, while those for non-farm exports increased 0.2 percent.

http://www.bloomberg.com/apps/news?pid=10000087&sid=aN.2qBxHypjg