US import prices fell in November as the cost of petroleum and several goods continued to decline, suggesting that cheaper crude oil and a strong dollar will keep imported inflation pressures subdued for a while.
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The Labor Department said its producer price index for final demand climbed by 0.3 percent in November following a 0.4 percent drop in October.
Economists surveyed by The Wall Street Journal had expected overall prices would hold steady, and core prices would rise 0.1%. By contrast, food prices edged up 0.3%, thanks to a 23.5% spike in the price of butter, the biggest one-month jump since November 2000.
The index for final demand services increased 0.5 percent, primarily due to a 1.2 percent increase in final demand trade services. Export prices are down 6.3 per cent year-over-year. Last month, imported petroleum prices fell 2.5% after rising 0.4% in October. That should lower prices at the pump in the coming months. Prices for industrial supplies, excluding petroleum fell 1.0 percent after a similar drop in October.
Inflation remains low even as the Federal Reserve nears its first rate hike in almost a decade.
Prices for imports fell 9.4% for the year ended in November, and have not increased on a 12-month basis since the index rose 0.9% in July 2014.
The contraction from the previous year is perhaps less severe than prior months but not by much.
According to the central bank’s preferred gauge, inflation has increased just 0.2 percent in the year ending in October. These missed the Bloomberg consensus estimates of down 0.8% in import prices and down 0.3% in import prices.
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Fed chair Janet Yellen has said for months that she expects inflation will eventually move back to their target, particularly as the prices of oil and gas stabilize.
