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First Cut: Import Price Index reflects even lower energy costs in April

The April Import Price Index declined 2.6% from March and was up a scant 0.2% form April 2019. Weakness in fuels prices were the main reason behind the change. Imported fuel costs were down 33.0% in April, even steeper than the 26.5% decline in March. Excluding fuels, import prices were down 0.5% in April from March, but up 4.6% compared to a year ago.

Some of the increase in costs other than fuels – which are priced in US dollars – was related to the firming in the dollar versus other currencies. Simply put, imported goods are cheaper to buy and therefor the dollar value of the volume of imports was less. When the Fed takes a look at inflation at the June 9-10 FOMC meeting, it will take into account that inflation and inflation pressures continue to make it difficult to get back up to the 2% target.

Prices for imported foods, feeds, and beverages were down 1.3% in April. Industrial supplies were down 12.3% overall, while down 3.2% excluding fuels. Prices for imported petroleum were down 33.0%, crude fuel down 37.5%, coals and coal gas down 2.8%, and natural gas down 3.3%.

Prices for imported finished goods were little changed in capital goods with an up 0.1%. Consumer goods excluding autos were down 0.2% in April. Imported automotive vehicles, parts and engines were up 0.4% in April.

The contraction in passenger air travel reflected both aggressive competition for what travel there was and lower costs of fuels. Imported air passenger fares were down 12.3% in April, the largest decline in the series history. On the other hand, imported air freight prices jumped 38.5% in April, the largest increase in the series history. If leisure and business travel has fallen to a bare minimum, the need to get goods moving through the supply chain has increased as production ramped up again in China and elsewhere.

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