US imports take biggest slide since 2008

US import prices tumbled 2.8 percent in January as the cost of petroleum and a range of other goods fell, according to the Labor Department. It was the biggest monthly drop for import prices in over six years. 

Hasan Jamali/AP/File
An oil pump works at sunset in the desert oil fields of Sakhir, Bahrain. US import prices posted their biggest drop since 2008 in January, as the cost of petroleum and a range of other goods fell.

U.S. import prices recorded their biggest drop in six years in January as the cost of petroleum and a range of other goods fell, a sign that domestic inflation pressures could remain muted for a while.

The Labor Department said on Friday import prices tumbled 2.8 percent last month, the largest decline since December 2008, after sliding by a revised 1.9 percent in December. It was the seventh straight month of declines in import prices.

Economists polled by Reuters had forecast import prices falling 3.2 percent last month after a previously reported 2.5 percent drop in December.

"Prices for industrial supplies were hit the hardest, plunging 9.1 percent in January," Barclays Research economist Jesse Hurwitz wrote in an e-mailed analysis. "In our view, the strength in the US dollar and lower energy prices are key factors driving the biggest monthly decline in imported nonpetroleum goods prices since 2009. The recent stabilization in oil prices should help slow the decline in prices of energy imports in coming months; however, the outlook for further monetary policy divergence and appreciation of the dollar will likely continue to put downward pressure on nonpetroleum goods prices."  

In the 12 months through January prices declined 8.0 percent, the largest year-on-year drop since September 2009.

Crude oil prices have plunged nearly 60 percent since June as increased shale production in the United State and weak global demand caused a glut on the market.

At the same time, the dollar has strengthened significantly against the currencies of the country's main trading partners, helping to pull inflation further away from the Federal Reserve's 2 percent target.

Despite low inflation, the U.S. central bank is widely expected to start raising interest rates in June, given a rapidly tightening labor market. The Fed has kept its short-term interest rate near zero since late 2008.

Data next week is expected to show producer prices fell for a third straight month in January.

Last month, imported petroleum prices plunged 17.7 percent, the biggest fall since December 2008, after dropping 12.4 percent in December. Imported food prices fell 2.2 percent in January, the largest fall since February 2012.

There were also declines in the prices of imported capital goods, automobiles and consumer goods excluding autos.

Import prices excluding petroleum fell 0.7 percent last month, the biggest drop since March 2009, after being flat in December.

The Labor Department report also showed export prices fell 2.0 percent in January, the largest decline since October 2011, after slipping 1.0 percent in December. A strong dollar is undercutting the competitiveness of U.S. exports.

Export prices fell almost across the board, with prices for non-agricultural goods and for industrial supplies and materials recording their biggest declines since 2008.

Export prices for consumer goods excluding autos saw their largest drop since 2009.

In the 12 months through January, export prices fell 5.4 percent, the biggest year-on-year decline since September 2009.

of stories this month > Get unlimited stories
You've read  of  free articles. Subscribe to continue.

Unlimited digital access $11/month.

Get unlimited Monitor journalism.