December 6, 2023

Prices of Imported Goods Increase as the Dollar Declines

The increase in the import-price index came after a revised 2.6 percent gain in March, according to figures from the Labor Department on Tuesday. Other reports showed distributors raised inventories and small businesses lost confidence.

The median forecast of 51 economists surveyed by Bloomberg News called for a 1.8 percent increase in import prices last month. Projections ranged from increases of 1 percent to 2.5 percent.

Compared with a year earlier, import prices increased 11 percent, exceeding the 10 percent increase projected by economists surveyed and the biggest 12-month gain in a year.

The increase in prices from overseas may put pressure on companies to pass on higher costs. The report on small businesses showed the share of those surveyed who planned to raise prices held in April at the highest level in 30 months.

“While many policy makers have described recent commodity cost increases as ‘transitory,’ the reality is that even at the small-business level, producers are increasingly more confident in their ability to pass on costs to customers,” Joseph LaVorgna, chief United States economist at Deutsche Bank Securities in New York, said in a note to clients.

After a two-day meeting in Washington last month, Fed officials said the effect on inflation from the jump in fuel and other commodities will probably be “transitory,” according to a statement released April 27.

The officials also lowered their forecasts for growth, saying the economy is recovering at a “moderate pace,” and agreed to finish $600 billion of bond purchases on schedule in June.

Confidence among small companies fell to a seven-month low in April, damped by a deteriorating outlook for the economy, a report from the National Federation of Independent Business showed. The group’s optimism index decreased to 91.2, the lowest since September, from 91.9 the prior month. Seven of the measure’s 10 components dropped.

Small businesses planning to increase prices held at a net 24 percent of owners for a second month, according to the report.

Increasing sales are also prompting wholesalers to increase stockpiles, according to figures from the Commerce Department. Inventories climbed 1.1 percent in March as sales jumped 2.9 percent. At the current pace of sales, distributors had enough goods on hand to last 1.13 months, matching the level in June 2008 as the lowest on record.

The report on prices from overseas showed the cost of imported oil increased 7.2 percent from the previous month and was up 37 percent from a year earlier. Excluding all fuels, import prices climbed 4.3 percent from April 2010, matching the prior month’s 12-month increase as the biggest since October 2008.

Imported food was 1.8 percent costlier last month and was up 20 percent from a year earlier, the biggest 12-month increase since records began in 1977.

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