By Joseph Rebello
WASHINGTON (Dow Jones)--Prices of imported goods in the U.S. rose the first time in eight months in January as petroleum prices rebounded, suggesting that the economy is again facing mild inflationary pressures from abroad.
Overall import prices rose a larger-than-expected 0.4% in January after falling 0.9% in December, the Labor Department said Thursday. That increase, the first since May, was mostly due to a surge in petroleum prices, which climbed 6%. Still, prices of imported non-petroleum products also rose, climbing 0.1% in the first increase in a year.
The numbers, however, are likely to have little effect on stock and bond prices Thursday. Investors widely expect the Federal Reserve, which cut its key interest rate to a 40-year low last year, to keep rates low for several months as the U.S. economic recovery gathers steam.
The key federal funds rate now stands at 1.75%, and investors don't expect it to decline further because the Fed has said it thinks the economy is starting to recover from its first recession in a decade. But the recovery isn't likely to generate inflationary pressures in the near term, Fed policymakers have said. Most economists, as a result, don't expect interest rates to start rising until late summer.
In year-on-year terms, the government's report on import prices Thursday showed that inflationary pressures from abroad continued to recede. In the 12 months through January, prices fell 8.6%. That compared with an 8.9% decline in the year through December. Excluding petroleum products, import prices fell 5.2% year-on-year in January.
Prices of goods imported from Canada registered the biggest increase in January - a gain of 0.3% that partly reversed a decline of 1.6% in December, the Labor Department said. Prices of imports from the European Union rose 0.2% after holding steady in December. Prices of imports from Latin America rose 0.1% after dropping 1.4% in December.
Prices of goods imported from Asia, however, continued to fall. Prices of Japanese imports fell 0.7%, more than twice the rate in December. Prices of goods imported from newly industrialized Asian countries such as Hong Kong, Singapore, South Korea and Taiwan fell 0.3%, less than half the decline in December.
Export prices continued to decline in January, falling 0.1% after falling 0.3% in December. Prices of agricultural exports fell 0.7% after a 1% increase in December. Prices of non-agricultural exports, however, were unchanged from December.