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Import Prices

Anjelica Tan/MEDILL

U.S. import prices rose 2.2 percent in April, driven by a 6.7 percent increase in fuel imports prices.

Import prices rise more than 2 percent for second straight month

by Anjelica Tan
May 10, 2011

Export Prices

Anjelica Tan/MEDILL

U.S. export prices increased 1.1 percent last month, with the gain in agricultural exports declining since February.

Import prices rose 2.2 percent in April, pushed by higher fuel costs. Economists surveyed by Dow Jones Newswires were expecting a 1.7 percent increase.

“There are two factors to focus on—the contribution of energy and the slowdown in growth in the price of agricultural exports,” said Adolfo Laurenti, deputy chief economist at Mesirow Financial Holdings Inc. in Chicago.

Fuel import prices increased 6.7 percent last month, accounting for about 80 percent of the overall rise in import prices, according to the U.S. Bureau of Labor Statistics. This follows an 8.5 percent increase in fuel import prices in March. For the fiscal year ended in April, fuel import prices advanced 34.8 percent, on top of a 54.4 percent hike in the 12-month period ended April 2010.

In the week following the U.S. raid on Osama bin Laden in Pakistan, crude oil prices fell below $100 for the first time since mid-March but have slowly rebounded, settling at $102.55 per barrel Tuesday.

“Chances are these changes in energy prices will prove temporary,” Laurenti said. “Instead, a major concern for the future is nonfuel imports.”

Prices for nonfuel imports rose 0.6 percent in April and 4.3 percent during the past year, the largest 12-month increase since a 4.8 percent advance in October 2008. In particular, the prices for imports from China went up 0.4 percent in April and 2.8 percent during the past year, the largest 12-month rise since December 2008.

“I think the China number is interesting,” said Samuel Kortum, an economics professor at the University of Chicago. “Over a long period of time, we’ve been thinking that eventually wages and prices are going to be pushed up in China and that it won’t be a cheap place to import from anymore.”

Kortum said rising Chinese import prices are something the U.S. should watch out for in the future, but Laurenti said he believes the increase will be gradual and won’t affect inflation any time soon.

“The story behind China is about exchange rates,” Laurenti said. “If the yuan appreciates against the dollar, that translates into higher import prices, but the Chinese will be very careful this appreciation of the yuan will be very slow.”

Exports prices rose 1.1 percent last month, compared with a 1.5 percent increase in March. Prices for agricultural exports increased 0.6 percent in April, the smallest monthly advance since a decline was recorded in July 2010. For the year, however, agricultural prices jumped 35.3 percent, the largest 12-month gain since July 2008.

“While we’ve had very high agricultural prices increasing since last summer to early this year, data from April 2010 show very low prices in that month,” Laurenti said. “There might be a seasonal factor pushing down prices in April or May.”

A 96.3 percent rise in corn prices and a 142.5 percent hike in cotton prices, which fell in April, led the tenfold increase in year-over-year prices for agricultural exports.