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First Cut: Import Price Index for June declines on mainly on petroleum costs

The Import Price Index for June declined 0.9% from May, mainly due to a 6.2% fall in the prices of petroleum. Excluding petroleum, prices were down 0.4%. Prices for industrial supplies and materials excluding petroleum were off 1.1%, reflecting decreases in unfinished metals for durables (-1.0%) and finished metals for durables (-0.3%), and materials for nondurables (-0.9%).

However, finished goods prices were not much changed month-over-month. Capital goods continued a modest downward trend with a decrease of 0.2%, automotive vehicles nudged up 0.1%, and consumer goods excluding automotive was down 0.1%.

Year-over-year, import prices continued to decline. Prices for all commodities were down 2.0% compared to June 2018, and were down 1.4% excluding petroleum.

Lower prices for imported commodities will contribute to keeping inflation measures from returning closer to the Fed’s 2% objective, at least for now. It is possible that a weaker dollar and higher oil prices could change the direction of commodities prices in the next month. And if trade negotiations with China are not successfully concluded, more tariffs could contribute to future price increases for commodities other than energy.

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