U.S. Import Prices Down 0.4% in April

Prices for imported goods slumped in April, dragged down by falling fuel and food prices and providing the latest evidence of stubbornly weak inflation across the U.S. economy.

U.S. import prices fell 0.4% from the prior month, the Labor Department said Tuesday. Economists surveyed by The Wall Street Journal had predicted import prices would rise 0.4% in April. Import prices were down 0.3% in April from a year earlier.

Prices for foreign petroleum fell 0.7% in April and natural-gas prices tumbled 18.5%. Prices for imported foods and beverages fell 0.7% after spiking 3.4% in March.

Excluding the often-volatile categories of food and fuel, import prices rose 0.1% from the prior month and fell 1% from a year earlier.

"Rather odd drops in imported petroleum and food prices—in a month when crude oil and food commodity prices increased—accounts for the surprise drop in import prices in April," RDQ Economics economists John Ryding and Conrad DeQuadros said in a note to clients. "Usually this divergence is a timing effect with import prices lagging commodity prices and we expect to see a catchup in import prices in May."

U.S. inflation has undershot the Federal Reserve's 2% target for nearly two years. The Fed's preferred inflation gauge, the Commerce Department's personal consumption expenditures price index, was up 1.1% in March from a year earlier. The Labor Department's consumer-price index rose 1.5% in March from a year earlier.

Prices for imported goods have been especially weak but rebounded somewhat in the first quarter of 2014, climbing 0.4% in January, an upwardly revised 1.1% in February and a downwardly revised 0.4% in March, month-over-month. The gains were driven in large part by the price of imported natural gas, up 157.8% in the six months ended March.

Despite falling in April, natural-gas prices still were up 41.1% over the past year. Petroleum prices were up 0.1% over the last 12 months. Imported food prices were up 4.2% in April from a year earlier.

Several import categories saw modest pricing gains last month. Prices for capital goods rose 0.1% from March, consumer products excluding autos were up 0.2% and automotive prices also rose 0.2%. Those gains "suggest last year's drag on core consumer goods prices from dollar appreciation may be fading," BNP Paribas economist Laura Rosner said in a note to clients.

Some Fed officials have expressed concern about persistently low inflation, which can be a signal of underlying economic weakness. "Low inflation in the United States tells us that resources are being wasted," Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said last month.

Fed Chairwoman Janet Yellen has said the central bank is monitoring inflation trends, but that policy makers are confident it will move back toward 2% over time. "Some of the factors contributing to the softness in inflation over the past year, such as the declines seen in non-oil import prices, will probably be transitory," Ms. Yellentold lawmakers last week.

Additional data on U.S. inflation during April will become available later this week. The Labor Department will release its producer-price index report on Wednesday and its CPI report on Thursday.

Source: The Wall Street Journal