Import Prices in U.S. Fell in June by Most Since 2008

Prices of goods imported into the U.S. decreased more than forecast in June as declining energy costs curbed inflation.

The 2.7 percent plunge in the import-price index was the biggest since December 2008 and followed a 1.2 percent drop in May, Labor Department figures showed today in Washington. Prices excluding fuel fell 0.3 percent, the most in almost two years.
The cost of goods and materials that the world’s largest economy purchases from abroad may remain depressed as cooling markets from Europe to Asia restrain demand for commodities like oil. A rising dollar also means American companies can hold the line on prices, consistent with Federal Reserve policy makers’ projections that inflation will ebb.

“Global demand is leaning toward slower growth,” said Jonathan Basile, an economist at Credit Suisse in New York. “Prices are under control. The Fed doesn’t have to worry about inflation.”

Import costs were projected to decline 1.8 percent, according to the median forecast of 47 economists in a Bloomberg News survey. Projections ranged from decreases of 0.4 percent to 2.8 percent.

A separate report from the Labor Department showed fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, reflecting the volatility of applications during the annual auto-plant retooling period.
Fewer Claims

Applications for jobless benefits decreased by 26,000 in the week ended July 7 to 350,000, the fewest since March 2008. Economists forecast 372,000 claims, according to the median estimate in a Bloomberg survey. Last week’s distortion is likely to unwind slowly over coming weeks, a Labor Department spokesman said as the data was released to the press.

Stock-index futures held earlier losses after the reports on concern the global economy is weakening. The contract on the Standard & Poor’s 500 Index maturing in September fell 0.8 percent to 1,326.2 at 8:55 a.m. in New York.

Compared with a year earlier, import prices decreased 2.6 percent, the largest 12-month drop since October 2009. They were forecast to drop 1.5 percent, according to the survey median.

The cost of imported petroleum decreased 11 percent from the prior month, the biggest decline since December 2008. It was also down 11 percent from a year earlier.

Excluding all fuels, import prices increased 0.6 percent from June 2011.
Imported Vehicles

Food and beverages purchased from abroad were 1 percent cheaper. The cost of imported automobiles fell 0.1 percent from the prior month. Consumer goods excluding vehicles also showed a 0.1 percent drop.

Imported capital goods prices were down 0.2 percent, the largest decline since October.

A. Schulman Inc., an Akron, Ohio-based supplier of plastic compounds, said it anticipates raw-material costs will remain relatively unchanged and it is seeing little evidence of pricing power among its suppliers.

“Every month somebody tells us they’re going to increase their price,” Chief Executive Officer Joseph Gingo said on a July 10 conference call with analysts. “And every month, they’re not able to push it through because there is no demand, or soft demand.”

The U.S. currency is strengthening as concerns about Europe’s debt crisis drive investors to prefer the safety of the greenback. The dollar climbed 6.7 percent in the 12 months to June 29 against a trade-weighted basket of currencies from its biggest trading partners, according to Fed data.
Raw Materials

Declining global metal prices are hurting overseas producers. Kumba Iron Ore Ltd. (KIO), a unit of Anglo American Plc, said first-half profit will probably fall by more than analysts estimated. Its detailed earnings are due July 20.

“The decrease in earnings is largely attributable to a decrease in export iron ore prices in the period,” the Johannesburg-based company said in a statement on July 6.

Today’s report showed the cost of goods from China was little changed. Goods from Latin America dropped 4 percent and those from the European Union decreased 0.7 percent.

Prices of Canadian imports dropped 2.9 percent, and goods from Mexico fell 2.2 percent.

U.S. export prices decreased 1.7 percent, the most since October, today’s figures showed. Prices of farm exports declined 4 percent, while those of non-farm goods fell 1.4 percent.

The import-price index is the first of three monthly price gauges from the Labor Department. Producer prices are due tomorrow, and the consumer-price index on July 17.