U.S. import prices increase 0.5 percent on jump in fuel

By Howard Schneider

WASHINGTON (Reuters) - U.S. import prices jumped faster than expected in September amid resurgent energy prices but prices excluding fuels were unchanged.

The Labor Department said on Friday import prices rose 0.5 percent last month. That was the largest increase since May and followed a revised 0.4 percent decrease in August.

Import prices were previously reported to have fallen 0.6 percent in August. Economists polled by Reuters had forecast import prices rising 0.2 percent in September.

In the 12 months through September, import prices rose 3.5 percent after a 3.8 percent increase in the 12 months through August.

Last month, prices for imported fuels and lubricants rose 3.8 percent, the largest increase since May, after falling 2.2 percent in August. Food prices advanced 2 percent in September after rising 0.3 percent in the prior month.

Excluding food and fuels, prices fell 0.1 percent in September. These so-called core prices fell 0.2 percent in August and were down in July and June as well.

The weakness in core import prices likely reflects ongoing dollar strength. The dollar has gained more than 6 percent this year against the currencies of the United States' main trade partners.

Dollar strength is expected to offset some of an anticipated increase in prices as the Trump administration presses ahead with tariffs on nearly all Chinese imports.

U.S. President Donald Trump imposed tariffs on nearly $200 billion of Chinese imports last month and then threatened more levies if China retaliated. China then hit back with tariffs on about $60 billion of U.S. imports.

On Thursday, Trump warned there was much more he could do that would hurt China's economy.

U.S. Treasury yields briefly rose after the data. The dollar was trading slightly higher.

The import price data excludes duties. In September, import prices for nonfuel industrial supplies and materials fell 0.4 percent after falling 0.9 percent in August. The cost of imported capital goods was unchanged.

Imported motor vehicle prices were also unchanged in September and have been virtually unchanged since May. The cost of consumer goods excluding automobiles fell 0.1 percent after being unchanged in August.

Prices for goods imported from China fell 0.1 percent in September for the third consecutive month. Prices for Chinese imports were up 0.4 percent in the 12 months through September.

The report also showed export prices were unchanged in September after declining 0.2 percent in August. Prices for agricultural products fell 1.4 percent last month, with prices for oilseeds and grains falling 6.9 percent.

Export prices rose 2.7 percent on a year-on-year basis in September after rising 3.5 percent in August.

(Reporting by Howard Schneider; Editing by Andrea Ricci)