Import Prices Rose Less Than Expected in October

(CN) – Import prices rose less than expected in October thanks to a decline in food prices that largely offset an increase in capital goods and imported fuel, the Labor Department said Thursday.

The government said import prices rose just 0.2 percent last month after an upwardly revised 0.8 percent jump in September.

Economists had been expecting import prices to rise 0.4 percent in October after a previously reported 0.7 percent gain in September.

In the 12 months through October, import prices increased 2.5 percent, slowing after a 2.7 percent rise in September.

Last month, prices for imported petroleum increased 1.7 percent after surging 6.3 percent in September.

Import prices excluding petroleum edged up 0.1 percent after shooting up 0.4 percent the prior month. Import prices excluding petroleum rose 1.4 percent in the 12 months through October.

Imported capital goods prices rose 0.2 percent last month, while the cost of imported food fell 0.2 percent.

The report also showed export prices were unchanged in October as the biggest monthly increase in the price of agricultural exports in nearly two years was offset by a decline in nonagricultural prices.

Export prices rose 0.7 percent in September. They increased 2.7 percent year-on-year after rising 2.8 percent in September.

Import and export prices are closely monitored economic indicators because they often have a direct impact on the bond market.

The measures are used to help track inflation in products that are traded globally. Bond prices will often decrease when importing inflation becomes to high, because it erodes the value of the original investment.

Inflation can also hurt the equity markets, because as inflation increases, interest rates are often raised to help curtail the rising prices. Rising interest rates often mean falling stock prices.

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