[WASHINGTON] US import prices were unchanged in May amid lower costs for energy products, but a weak dollar lifted prices elsewhere, which could eventually lead to higher domestic inflation.
The unchanged reading in import prices last month followed an unrevised 0.1 per cent gain in April, the Labor Department’s Bureau of Labor Statistics said on Tuesday (Jun 17).
Economists polled by Reuters had forecast import prices, which exclude tariffs, falling 0.2 per cent.
In the 12 months through May, import prices rose 0.2 per cent.
Data last week showed tame consumer and producer price readings in May. Economists say inflation has remained moderate as businesses are still selling inventory accumulated before President Donald Trump’s sweeping tariffs on imports.
They expect the import duties will boost inflation in the second half of the year. The tariffs have raised fears of a slowdown in global growth, weighing on oil prices.
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But that disinflationary impulse is likely over amid conflict between Israel and Iran, which has boosted oil prices.
Federal Reserve officials were scheduled to start a two-day policy meeting on Tuesday. The US central bank on Wednesday is expected to leave its benchmark overnight interest rate in the 4.24 per cent-4.50 per cent range while policymakers monitor the economic impact of tariffs and tensions in the Middle East.
Imported fuel prices decreased 4.0 per cent in May, falling for a third straight month. Food prices declined 0.3 per cent after easing 0.1 per cent in the prior month.
Excluding fuels and food, import prices increased 0.4 per cent. That followed a 0.5 per cent advance in April. In the 12 months through May, the so-called core import prices increased 1.3 per cent.
Prices for imported capital goods gained 0.2 per cent, while those of consumer goods excluding motor vehicles also rose 0.2 per cent.
Prices for imported motor vehicles, parts and engines edged up 0.1 per cent. A softening dollar is driving up these prices.
Trump’s aggressive trade posture has shaken investors’ confidence in the dollar, eroding the appeal of US assets. The trade-weighted dollar is down about 6.2 per cent this year. REUTERS
