US import prices unchanged in December after two straight monthly decreases

U.S. import prices were unexpectedly unchanged in December after two straight monthly decreases, but the trend in imported inflation remained subdued.
 

The unchanged reading in import prices last month followed a revised 0.5% decline in November, the Labor Department's Bureau of Labor Statistics said on Wednesday. Import prices were previously reported to have fallen 0.4% in November.
 

Economists polled by Reuters had forecast import prices, which exclude tariffs, would drop 0.5% in December.

In the 12 months through December, import prices fell 1.6% after declining 1.5% in November. Annual import prices have now dropped for 11 consecutive months.
 

The government reported last week that rising shelter and health costs lifted consumer prices in December. Producer prices, however, declined for a third straight month.
 

Though overall inflation remains above the Federal Reserve's 2% target, financial markets are betting that the U.S. central bank will start cutting interest rates in March amid some easing in labor market conditions.
 

Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.
 

Imported fuel prices slipped 0.3%. That followed a 6.4% plunge in November. The cost of imported food dipped 0.1% after rebounding 1.0% in the prior month.
 

Excluding fuels and food, import prices rose 0.1% after being unchanged in November. These so-called core import prices dropped 1.0% on a year-on-year basis in November.
 

The monthly increase, if sustained, could be an indication that goods price deflation is running its course. Consumer goods prices edged up in December and were unchanged excluding food and energy after six straight monthly declines.

Prices for imported capital goods fell 0.1% last month, matching November's drop. The cost of motor vehicles, parts and engines rebounded 0.1% after easing 0.1% in the prior month.
 

Consumer goods excluding automotives were unchanged for the fourth straight month. Prices of goods imported from China fell 0.1% after declining 0.2% in November. They fell 3.0% on a year-on-year basis in December.
 

The report also showed export prices fell 0.9% for the third month in a row in December. Export prices for agricultural commodities dropped 0.6% amid lower prices for soybeans and other oilseeds, corn, meat and nuts, which more than offset higher fruit prices.
 

Nonagricultural export prices decreased 0.9%. Export prices fell 3.2% on a year-on-year basis in December after dropping 5.2% in November.