Signs of higher inflation ahead in US import price data for July

Imports prices edged higher unexpectedly in the US for a fifth-month running in July, buoyed by the cost for non-fuel purchases overseas.

The import price index rose by 0.1% month-on-month but was 3.7% lower in comparison to a year ago, according to the Bureau of Labor Statistics.

Economists had forecast a decline of 0.3% on the month and 43% over the year.

Jesse Hurwitz at Barclays Research explained that prices for imported petroleum, down by 3.6% month-on-month, had retreated by about one percentage point less than analysts had penciled in.

Food import prices also rose, by 3.6% month-on-month.

Significantly, Hurwitz detected a waning influence from US dollar strength in the data, as reflected in the rest of the categories, which he believed would lead to stability in domestic core goods prices over coming months.

Versus the previous month fuel import prices were down by 2.5% and those for non-fuel purchases up by 0.3%

Excluding non-petroleum imports, prices increased by 0.5% month-on-month versus a forecast for a rise of 0.2%, Hurwitz added.

Export prices on the other hand fell by 3.0% in June, with those of agricultural goods off by 2.6% while those of non-agricultural ones declined by 3.0%.

“More stable prices for domestic consumer goods should lead overall core CPI to edge up in the second half of this year; we look for core CPI inflation to have reached 2.4% y/y by the end of 2016,” Hurwitz concluded.