U.S. Import Prices Increase Slightly in December

WASHINGTON (Reuters) – U.S. import prices saw a marginal rise for a third consecutive month in December, primarily due to soaring fuel and food costs, which offset declines in other areas, indicating a positive trend for inflation.

Import prices went up by 0.1% last month, matching the increases observed in the previous two months, according to the Labor Department’s Bureau of Labor Statistics on Thursday.

The increase in import prices, which do not include tariffs, aligned with economists’ forecasts.

Over the twelve months leading up to December, import prices rose by 2.2%, an increase from 1.4% in November.

Recent government data highlighted a moderation in producer inflation for December, while consumer prices saw an uptick due to higher energy and food prices. However, the disinflationary trend persists, with consumer prices, excluding the volatile food and energy sectors, showing only a slight rise last month.

The Federal Reserve is predicted to maintain interest rates during this month’s policy meeting, with financial markets anticipating a rate cut in June. Since commencing its policy easing cycle in September, the U.S. central bank has reduced its benchmark overnight interest rate by 100 basis points, placing it in the 4.25%-4.50% range. This follows an increase of 5.25 percentage points between March 2022 and July 2023.

In December, imported fuel prices surged by 1.4%, the highest increase since April, following a 0.9% rise in November. This surge was driven by higher natural gas and petroleum costs.

Food prices spiked by 2.8% after a 1.4% rise in November.

When excluding fuels and food, import prices fell by 0.2%, following a stable November. The strength of the U.S. dollar against the currencies of major trading partners has been keeping core imported inflation in check, with core import prices rising 1.9% over the twelve months up to December.

Additionally, prices for imported capital goods decreased for a second consecutive month, as did the prices for automotive vehicles, parts, and engines. Imported consumer goods, excluding automotive products, remained stable for a second month in a row.