U.S. import prices rise sequentially in October, likely to move away from deflation territory in coming months

Import prices in the U.S. grew slightly higher than consensus expectations in October, mainly driven by the sharp increase in petroleum products. Import prices grew 0.5 percent in sequential terms, as compared with the consensus estimates of a rise of 0.3 percent month-on-month. The September figure was upwardly revised to 0.2 percent month-on-month. On a year-on-year basis, it rose to -0.2 percent from -1.1 percent in the prior month.

The sequential rise in October was mainly due to an increase in prices of imported petroleum products, which rose 7.5 percent sequentially. After rising for three straight months, prices of food and beverage dropped 0.6 percent.

For non-petroleum products, prices dropped modestly. On a year-on-year basis, non-petroleum prices recorded a fall of 0.4 percent, as compared with 3.4 percent decline seen in October of last year. This implies that the drag from a stronger dollar has all but faded, noted Barclays in a research report. Import prices are expected to gradually move away from deflation territory in the months ahead, after improving global commodity prices and the gradual fading of the effect of a stronger dollar, added Barclays.