U.S. import prices rebound at solid pace in May on strong rise in food and energy prices

U.S. import prices rose at a strong rate in May, rising 1 percent on a sequential basis. The strong rise was driven by food and energy prices, which are typically quite volatile and can exhibit quite large sequential swings, noted Barclays in a research report. Energy prices rose 21.7 percent sequentially after recording a fall of 33.2 percent and 26.5 percent in the prior two months, respectively. Meanwhile, the solid rise of 2 percent in food prices was paying back some earlier softness.

Underlying price pressures in the less volatile components continued to be subdued and indicate towards ongoing headwinds to the import prices outlook.

“We believe that the expected weakness in global demand, as well as the relative strength of the USD earlier this year have pushed down on imported inflation recently. We view the depreciation of the dollar since mid-May as a likely source of upside potential for import prices. Nevertheless, we do not anticipate that imported inflation will intensify enough to put significant pressures on domestic prices in the current environment of subdued demand and high uncertainty about the economic outlook”, added Barclays.