The prices the USA paid for imported goods fell by 0.5% in October to mark the fourth decline in a row.
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The Labour Department said on Tuesday import prices dropped 0.5% last month after a revised 0.6% decline in September. In addition, it is believed that weakness in emerging Asia, especially China, is likely to push down import prices over and above any effect from the appreciation of the dollar.
In the last twelve months before Oct, prices have fallen by 10.5 %. The robust dollar and a sharp decline in oil prices have weighed on inflation, which is persistently running below the Federal Reserve’s 2 percent target.
Weak inflation pressure is unlikely the deter the USA central bank from increasing interest rates in Dec after job growth has surged in Oct and unemployment rate was at a 7 year low of 5 %. The price of U.S.-made goods exported to other nations dipped 0.2% last month.
Economists had forecast import prices slipping 0.1% after a previously reported 0.1% fall in September.
In October, imported food prices dropped 1.0 percent, also the largest decline since January, after falling 0.7 percent in September.
The dollar has gained 16.6 percent against the currencies of the United States’ main trading partners since June 2014.
USA export prices fell 0.2% in October from the prior month. Import prices excluding petroleum fell 0.2% in September.
Prices for imported capital goods fell 0.1 percent, while prices for imported automobiles dropped 0.3 percent, the biggest fall since February.
Petroleum import prices are down 48% from a year ago.
“Inventories are a key component of gross domestic product changes”, Reuters wrote. The component of wholesale inventories that goes into the calculation of GDP – wholesale stocks excluding autos – increased 0.5 percent. The surprise uptick suggests the government’s third-quarter economic growth estimate could be revised higher.
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Wholesale sales also increased 0.5% in September, but were down 3.9% from a year earlier. At 1.31, the wholesale sales-to-inventories ratio is at its highest since 2009.
