Drop in fuel costs, dollar strength weigh on US import prices

Import prices in the US declined sharply in December, led by a drop in the cost of fuel imports.

The US import price index retreated at a 1.2% month-on-month (8.2% year-on-year) clip, according to the Bureau of Labor Statistics.

Nevertheless, that was less than the fall of 1.5% over the month and 8.6% year-on-year that economists had pencilled in.

In comparison to a year ago, fuel import prices were off by 29.1%.

Non-petroleum import prices slipped by 0.3% over the month and those of fuel by another 9.5%.

Export prices were also lower at the end of 2015, dropping 1.1% over the month and by 6.5% year-on-year.

“Economic weakness in many emerging markets, combined with the recent further declines in commodity prices and on-going appreciation of the dollar, is likely to keep import prices from emerging markets declining for some time.

“Our expectation of these further declines in import prices and the subsequent pass-through to consumer prices is the major driver of our soft consumer price inflation forecast for this year,” Barclays’s Rob Martin said in a research note sent to clients.