The U.S. Labor Department presented a report on Friday showing that import prices in the United States rose in line with the economic forecasts for the month of February. The data shows a 0.3 percent increase in February following a 0.8 percent growth in January, which was in accordance with the expectations.
The slight rise in import prices can be primarily attributed to the continued upward trajectory in fuel import prices. These witnessed a considerable increase of 1.8 percent in February, following a 1.2 percent rise in January, due to increased prices of petroleum and natural gas.
Furthermore, non-fuel import prices also experienced a minor upsurge of 0.2 percent in February after a 0.7 percent increase in January. Higher prices for consumer goods, foods, beverages, capital goods, and automotive vehicles were able to offset decreased prices for non-fuel industrial supplies and materials.
Despite the two consecutive monthly increases in import prices — a first since the period of August-September 2023 — prices were 0.8 percent lower compared to the same month last year.
Matthew Martin, U.S. Economist at Oxford Economics commented, "Despite higher fuel prices, monthly increases in the headline import price index decelerated markedly in February, indicating that the substantial gain in January was not indicative of a persistent trend." He explained that the Federal Reserve is likely to place more importance on the CPI and PPI reports from earlier this week, which demonstrated a slowdown in progress towards its target. However, he added, the February import price report is a testament to the fact that the effects of recent supply chain disruptions and escalated shipping costs on goods' prices may not be as grave as the January report suggested.
The Labor Department report also noted a 0.8 percent increase in export prices in February, following an upward revision to a 0.9 percent rise in January. An increase of only 0.2 percent was forecasted compared to the 0.8 percent increase initially reported for the previous month. The unexpectedly significant export price growth reflected higher prices for both agricultural and non-agricultural exports.
Agricultural exports prices recovered by 0.8 percent in February after a 1.0 percent decline in January. Non-agricultural export prices increased by the same extent in February, after a 1.1 percent rise in January. Despite this, export prices in February were still 1.8 percent lower compared to this month the previous year. This, however, represents the smallest year-on-year decline since the 0.8 percent drop from February 2022 to February 2023.
