US Import Prices Fall Slightly Less Than Expected In October

The price index for nonfuel imports has not recorded a monthly advance since the index ticked up 0.1 percent in July 2014.

Import prices of other commodities fell by 0.4 %, the largest drop since January This was because of the 16.6 % rise of the dollar against currencies of main trading partners of the US.

Economists had forecast import prices slipping 0.1 per cent after a previously reported 0.1 per cent fall in September.

Other data showed an increase in Sep of wholesale inventories which suggested that the 3rd quarter economic growth of the government may be revised upwards.

The Labor Department said on Tuesday import prices dropped 0.5 per cent last month after a revised 0.6 per cent decline in September.

In the 12 months through October, prices tumbled 10.5 percent.

Weak inflation pressures, however, are unlikely to deter the U.S. central bank from raising interest rates next month after job growth surged in October and the unemployment rate fell to a 7-1/2-year low of 5.0%. Sales at wholesalers rose 0.5 percent in September after declining 0.9 percent in August. In addition, because the majority of non-automotive consumer goods are sourced from emerging Asia, we believe the declines in import prices are also likely to pass-through into consumer prices. Its impact on inflation was underscored by a 0.4 percent drop in import prices excluding petroleum last month, the largest decrease since January.

“Inventories are a key component of gross domestic product changes”, Reuters wrote. In October, both a 2.1-percent drop in petroleum prices and a 2.5-percent decrease in natural gas prices contributed to the overall drop in import fuel prices.

October’s decline was broad-based, with prices for petroleum and natural gas, industrial supplies like paper and metal, food, autos and capital goods all falling. Import prices excluding petroleum fell 0.2% in September. At 1.31, the wholesale sales-to-inventories ratio is at its highest since 2009.