The numbers: The cost of goods imported into the U.S. rose mildly in April, mostly because of the higher cost of oil. Energy aside there was little hint of rising inflation.
The import price index climbed 0.2% last month, the government said Tuesday. That was well below Wall Street forecasts calling for an increase of 0.7%.
If fuel is excluded, import prices actually fell 0.1% — the fourth straight decline.
Overall, import prices have fallen 0.2% in the past 12 months despite higher oil prices. By contrast, they were running at a 3.5% annual clip a year earlier.
The decline stems mainly from a stronger U.S. dollar
that has made foreign goods cheaper for Americans to buy. A slower global economy has been another contributor — a slowdown triggered in part by a festering trade dispute between the U.S. and China, the world’s two largest economies.
What happened: The cost of fuel imports increased 2.5% last month, but that marked a big dropoff from 6.1% in March and 10.2% in February. Prices also rose for food, beverages and animal feeds.
The cost of almost everything else was flat to lower. Prices of industrial supplies excluding oil, for example, sank 3.3%.
The price of U.S. exports, meanwhile, rose 0.2%.
Big picture: Inflation in the U.S. tapered off toward the end of last year and is hovering just below a 2% annual pace. Rising oil prices have pushed inflation a bit higher in the past few months, but not enough to worry the Federal Reserve.
A wild card is the cost of imports. Stiffer U.S. tariffs on China could lead to higher prices for many consumer goods such as TVs, cell phones and appliances as well as critical business supplies.
So far the tariffs haven’t had a big impact, though. If they do, the brunt of the impact is more likely to show up in U.S. wholesale or consumer price indexes.
The import price index effectively strips out the added costs of tariffs, though it would capture price reductions by Chinese suppliers if they lower their them to maintain market share. Prices for Chinese imports have fallen 1.1% in the past 12 months, the biggest 12-month decline in almost two years.
What they are saying?: “Softer global growth and a stronger dollar are continuing to weigh on domestic inflation,” economists Jake McRobie and Gregory Daco of Oxford Economics wrote to clients.
Market reaction: The Dow Jones Industrial Average
and S&P 500
rose in early Tuesday trades following a big decline on Monday after China retaliated with tariffs on U.S. exports. The two countries are still engaged in a tense standoff over trade rules after talks faltered last week.
The 10-year Treasury yield
was flat at 2.42%.