U.S. import prices rise in December on rebound in energy, likely to strengthen further in months ahead

The U.S. import prices rose in December, owing to rebound in energy. On a sequential basis, U.S. import prices grew 0.4 percent, below consensus projection of 0.7 percent rise. The data for November was upwardly revised a bit to a decline of 0.2 percent from a decline of 0.3 percent. The rise in December was mainly driven by a sharp recovery in imported prices of petroleum products, which rose 7.9 percent month-on-month and industrial supplies that grew 3.2 percent.

Meanwhile, prices of other commodities dropped. Prices of food and beverage dropped 1.4 percent sequentially, reversing the rise of 1.3 percent in November. Non-petroleum products prices dropped 0.2 percent. Stripping fuels and food, import prices dropped 0.1 percent sequentially.

In all, import prices were up 1.8 percent in sequential terms, while nonpetroleum import prices remained flat on a year-on-year, a rebound from the robust deflationary trend seen in 2014 and 2015. The recent upward trend implies that the impulse from the dollar appreciation and the drag from the subdued global import prices have waned. This leads to project that import prices might strengthen further in the months ahead. The recent surge in China’s PPI gives additional support this view, stated Barclays in a research report.