Inflation Still Coming Through As Import Prices Rise More Than Expected

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Headline: Up 0.2% month-over-month, 12.5% year-over-year

Expectations: 0.7% month-over-month decline in prices, 11.2% year-over-year increase in prices

Analysis: Import prices surged last month, and while this month’s gains are much more modest, they are greater than expectations.

Lower fuel prices did help to slow price increases though.

From the BLS:

U.S. import prices increased 0.2 per cent in May, the U.S. Bureau of labour Statistics reported today, after advancing 3.0 per cent in March and 2.1 per cent in April. A 0.2 per cent drop in fuel prices partially offset higher nonfuel prices. U.S. export prices rose 0.2 per cent in May following a 0.9 per cent increase the previous month.

All Imports: Import prices ticked up 0.2 per cent in May after rising more than 1.0 per cent in each of the
previous seven months. The May advance was led by higher nonfuel prices. In contrast, fuel prices declined for the month. Prices for overall imports advanced 12.5 per cent over the past year, the largest 12-month month increase since the index rose 13.1 per cent between September 2007 and September 2008.

Fuel Imports: Prices for fuel decreased 0.2 per cent in May, the first monthly decline for the index since a 1.5 per cent drop in September 2010. In May, a 0.4 per cent drop in petroleum prices more than offset a 4.1 per cent increase in natural gas prices. Despite the May decrease, fuel prices advanced 42.3 per cent over the past 12 months, the largest year-over-year rise since the index increased 54.4 per cent for the year ended April 2010. Both petroleum and natural gas prices rose for the May 2010-11 period, advancing 44.6 per cent and 8.8 per cent, respectively.  

All Imports Excluding Fuel: The price index for nonfuel imports continued to rise in May, although the 0.4 per cent increase was the smallest monthly advance since a 0.3 per cent gain in December 2010. Since August 2010, the index has risen between 0.3 per cent and 0.8 per cent on a monthly basis. Higher nonfuel industrial supplies and materials prices and finished goods prices drove the May advance, while foods, feeds, and beverages prices decreased for the month. Overall, nonfuel import prices rose 4.4 per cent on a 12-month basis.

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