On Thursday, the US Labor Department reported surprising increases in import and export prices for January. According to the report, import prices rose by 0.8% in January, contrary to the flat reading economists predicted and following a revised 0.7% drop in December.
This rise, the first since September 2023, represented the largest monthly advance since a 2.9% surge in March 2022. The unexpected growth in import prices is partially due to a recovery in fuel import prices, which bounced back by 1.2% in January following a significant 7.7% drop in December.
Prices for non-fuel imports also saw a 0.7% increase in January, after remaining static in December. This increase emerged in line with rising prices for consumer goods, capital goods, automotive vehicles, and food, feed, and beverages.
Matthew Martin, a US Economist at Oxford Economics, noted that while fluctuating oil prices have been a regular occurrence in recent quarters, this is the first month's data reflecting higher goods prices due to supply chain disruptions and increasing shipping costs. He stressed that while the monetary implications of this month's data are not substantial at this stage, the recent data does suggest that a rate cut in the upcoming March Federal Open Market Committee meeting is unlikely.
Despite the monthly recovery, import prices in January were still 1.3% lower than the same period last year. However, this year-on-year decrease was less significant than December's drastic 2.4% drop.
The report also noted a 0.8% increase in export prices in January, following a revised 0.7% decrease in December. This increase, against expectations of a 0.1% decline, marked the first rise since September 2023. Non-agricultural export prices rose by 0.9%, outweighing a 1.0% decrease in agricultural export prices.
In terms of year-on-year comparison, January's export prices were down by 2.4%, a smaller decrease than December's substantial 2.9% decline.
