Department of Labor Report: U.S. Import Prices Fell in June
The prices of imported goods in the U.S. dropped for the first time in a year in June, with both oil and food prices declining. According to the Department of Labor’s import-price index report, released this morning, the index fell 0.5% in June after increasing 0.1% in May. However, import prices are still up 13.9% over the last 12 months.
Declining prices will benefit companies that have been dealing with higher input costs, hurting their profit margins. Federal Reserve Chairman Ben Bernanke predicts that commodity prices will continue to fall from their highs as supply constraints wane.
The cost of imported petroleum fell 1.6% in June from the previous month, the largest one-month percentage drop since June 2010, but petroleum prices were still up 50% year-over-year. When excluding fuel, import prices declined 0.1% in June from the previous month, and gained 4.8% over June 2010, the biggest 12-month gain since October 2008. On a month-over-month basis, imported food prices fell 1.9% in June and unfinished metals fell 2.6%, but the cost of automobile parts and engines rose 0.3%, offsetting declines.
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Despite recently declining costs, most goods prices are still up significantly over 2010 prices. Add to that the rising cost of energy (NYSE:XLE) and labor and businesses are looking at drastically increasing input costs.
Fortunately for the U.S. economy, export prices also increased last month, up 0.1%. However, considering May’s 0.2% advance, that rate could be slowing. Last month, the cost of goods exported from China (NYSE:FXI) grew 0.1%, those from Latin America (NYSE:ILF) fell 1.1%, those from Canada (NYSE:EWC) fell 1%, and those from Mexico fell 2.2%. The cost of exports from the EU were on par with the U.S., gaining 0.1%