Prices of goods imported into the U.S. rose less than forecast in November, reflecting lower costs for metals and food, indicating inflation will remain contained.
The import-price index climbed 0.7 percent, the first increase in four months and followed a 0.5 percent drop in October, Labor Department figures showed today in Washington. Economists projected the gauge would increase 1 percent, according to the median forecast in a Bloomberg News survey. Prices excluding fuel decreased 0.2 percent for a second month, the first back-to-back drop in more than a year.
Oil prices may have reached a plateau this month, indicating increases in the cost of imported goods may moderate as slowing growth from Europe to Asia and a strengthening dollar hold down prices. Federal Reserve policy makers yesterday said they expected inflation to slow and reiterated their pledge to hold the benchmark rate “exceptionally low” at least through mid-2013.
“It’s really due to a pullback in non-petroleum prices because of the strengthening dollar,” Brian Jones, a senior U.S. economist at Societe Generale in New York, said before the report. “Inflation is stable and it’s really no impediment to any policy change the Federal Reserve might enact.”
Projections for import prices ranged from a decrease of 0.1 percent to a 2 percent increase, according to the Bloomberg survey of 47 economists.
Stock futures declined, indicating the Standard & Poor’s 500 Index may retreat for a third day. The contract on the S&P 500 expiring in March dropped 0.2 percent to 1,218.3 at 8:34 a.m. in New York.
Compared with a year earlier, import prices rose 9.9 percent, today’s report showed, compared with an 11 percent increase in the 12 months ended in October.
Fuel Costs
The cost of imported petroleum climbed 3.6 percent from the prior month and was up 33 percent from a year earlier.
Imported food was 0.1 percent less expensive last month. Costs of imported unfinished metals slumped 5 percent, and building materials decreased 0.4 percent.
Auto imports increased 0.2 percent and were up 3.5 percent from November 2010.
Consumer goods excluding vehicles showed a 0.1 percent price gain, and were up 3.3 percent over the past 12 months.
A strengthening of the U.S. dollar over the last three months may make foreign goods cheaper in the U.S. Since Aug. 31, the Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against that of six major trade partners including the euro and yen, has gained about 8 percent after falling 11 percent in the year ended Aug. 31.
Goods From China
The cost of imported goods from China increased 0.3 percent and were up 3.9 percent over the past 12 months, the biggest year-over-year gain since October 2008.
Imported goods from Germany and the Newly Industrialized Asian Countries dropped.
“Inflation has moderated since earlier in the year, and longer-term inflation expectations have remained stable” Federal Reserve policy makers said in a Dec. 13 statement after their most recent monetary policy meeting. The monetary policy making committee “also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the committee’s dual mandate” of maintaining low inflation and boosting employment.
American Eagle Outfitters Inc. (AEO), a Pittsburgh-based clothing retailer, is among companies projecting that costs will fall after cotton prices soared earlier this year.
Cotton Prices “
Strong sales growth enabled to us overcome significant pressure from higher cotton costs,” James O’Donnell, chief executive officer of American Eagle, said on a Nov. 30 conference call. “However, we do expect to benefit from lower cotton costs beginning in the second half of 2012.”
The Fed’s preferred price gauge, which excludes food and fuel, rose 0.1 percent in October after no change the prior month. Fed policy makers aim for long-run overall inflation of 1.7 percent to 2 percent, according to their Nov. 2 forecast.
Policy makers this week reiterated their pledge to hold the benchmark interest rate near zero at least through the middle of 2013 so long as joblessness stays high and the inflation outlook is “subdued.”
U.S. export prices increased 0.1 percent after falling 2.1 percent the previous month, today’s figures showed. Prices of farm exports climbed 1.5 percent, and those of non-farm goods decreased 0.1 percent.
The import-price index is the first of three monthly price gauges from the Labor Department. Data on producer prices come out tomorrow, followed the next day by the consumer-price
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U.K. Unemployment Rises as Officials See Global Outlook Darkening: Economy
U.K. unemployment rose to a 17-year high in the three months through October, deepening concerns Britain is heading for another recession as turmoil in the euro area damps the global economic outlook.
Unemployment as measured by International Labor Organization standards rose by 128,000 to 2.64 million, the most since 1994, the Office for National Statistics said in London today. The jobless rate climbed to 8.3 percent from 7.9 percent between May and July, the highest since 1996.
Job Cuts
The U.K. data also showed that jobless-benefit claims rose by 3,000 in November to 1.6 million, the highest level since January 2010. In the quarter through October, payrolls fell 63,000 as the government axed jobs and private companies all but froze hiring. Unemployment among 16-24-year-olds climbed 54,000 to 1.03 million, or 22 percent, the highest since comparable records began in 1992.
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Singh Sees India Climbing to 9% Growth Rate With Market-Opening Measures
India’s Prime Minister Manmohan Singh said his nation’s economy will return to a long-term growth pace of 9 percent as inflation slows and the government extends a record of market-opening policies.
“We will stay the course,” Singh said in an interview in his office in Parliament House in New Delhi today. “We will make India an eminently bankable and creditworthy economy.”
Gross domestic product will increase 7.5 percent in the fiscal year that ends March 31, while inflation will cool to between 6 percent and 7 percent, Singh said. The slide in the rupee won’t diminish investor confidence, he said.
The prime minister said he expects to succeed in his push to open India’s retail market to foreign companies after regional elections conclude by the end of March 2012. The benchmark Sensitive Index (SENSEX) of stocks had its biggest three-day drop since July 2009 after his administration suspended the opening of foreign-direct investment into the retail industry.
Shoppers Stop Ltd. (SHOP), India’s second-largest retailer by market value, gained 1 percent to 310.6 rupees, ending five straight days of losses after Singh’s pledge on opening the industry to foreign investment. Wal-Mart Stores Inc. and Tesco Plc are among overseas companies that have pushed to enter Asia’s third-largest economy.
