US Import Prices:
WASHINGTON (Dow Jones)--The price of goods imported into the U.S. rose in May, but the increase was due entirely to rebounding oil prices.
The Labor Department said Thursday that import prices advanced 0.6% in May after falling a revised 1.5% in April. A 6.5% boost in petroleum prices led the May increase. Oil import prices dropped 11.8% in the prior month.
But as the higher cost of oil pushed import prices up in May, economists say the strong U.S. dollar limited the magnitude of the increases. Excluding petroleum prices, the import price index fell for the first time since last July, dropping 0.2% in May after rising 0.1% in April.
Despite the monthly drop, core import prices have trended higher since late last year and were up 0.9% in annual terms in May. Overall import prices were up 6.4% year-over-year.
Though the evidence of inflation has been mixed of late, Federal Reserve officials hinted this week that higher interest rates may be necessary to eliminate excess domestic demand in the economy. Fed Gov. Laurence Meyer said the central bank may need to slow U.S. economic growth to an annual rate well below 4% if it is to eliminate inflationary pressures that have accumulated after years of feverish growth.
Still, financial markets believe the Fed may choose to leave interest rates unchanged later this month in order to assess the impact of the six rate hikes it has implemented over the past 12 months. Recent data suggest the economy is now reacting to tighter monetary policy: The unemployment rate rose unexpectedly in May and the housing sector appears to be cooling.
The Federal Open Market Committee meets next on June 27-28 to consider interest rates.
Within Thursday's report, the Labor Department said the price of imported capital goods fell 0.2% in May, while prices for non-petroleum industrial supplies and materials posted the biggest decline in 13 months, a 0.3% decrease. Import prices for foods, feeds and beverages dropped 1.2% in the month, the largest decline since January.
By country, the Labor Department said the price of goods imported from Japan and the Asian Newly Developed Countries was unchanged in May after falling 0.6% and 0.7%, respectively, in April. Latin American import prices rose 1.3% in the month after falling 2.1% in April. European import prices edged up by 0.1% during May, while import prices from Canada increased for the 15th straight month.
Export prices rose 0.2% in May following April's 0.1% decline. That's the fourth increase in the export price index this year. The rise included a 0.2% jump in agricultural export prices and a 0.7% advance in industrial supplies and materials prices. Exported capital goods, auto and consumer goods prices were unchanged in May.
-Henry J. Pulizzi; Dow Jones Newswires; 202-862-9255
(END) DOW JONES NEWS 06-08-00
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