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First Cut: April Import Price Index up slightly on petroleum, but otherwise import costs were down

The April Import Price Index was up 0.2% month-over-month in a string of four monthly gains driven mainly by petroleum costs. In April, the price of petroleum imported was up 6.1%, but excluding petroleum, the index was down 0.6%. The BLS said of imports, “All of the major import categories except foods, feeds, and beverages contributed to the decrease in nonfuel prices over the past year”.  The index for foods, feeds, and beverages (accounting for 5.995 of the overall index) was up 2.8% in April from March. Prices were sharply higher for vegetables (up 12.7%) and fruits (up 12.3%), possibly related to shortages of some spring crops.

Compared to April 2018, import prices were down 0.2%, with petroleum prices up 7.0% and those excluding petroleum down 1.0%.

Some of this is related to relatively flat movements in foreign exchange rates. The Fed’s broad currency index for goods only has moved only marginally higher since a decline in January and costs for oil — which is priced in dollars — will remain the swing factor in import costs.

Prices for finished goods were broadly lower. Capital goods prices were down 0.4%, automotive edged 0.1% lower, and consumer goods excluding automotive were down 0.3%.

There is little indication that import prices will provide a push higher for overall price stability. There may be other domestic factors that will keep measures of inflation not far off the Fed’s 2% objective. Costs for services are generally outpacing those for commodities.

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