Rising Oil Prices Lift U.S. Imports in March

Prices for U.S. imports rose 0.2% in March following a 0.4% decrease the prior month, driven by rising fuel prices, which more than offset lower nonfuel prices. U.S. export prices remained unchanged for the month after falling 0.5% in February, according to the Labor Department’s U.S. Import and Export Price Indexes, released April 12.

“While the dollar gave back some ground in March, the still strong level combined with weak growth overseas continues to limit exporters’ pricing power,” said Sam Bullard, senior economist with Wells Fargo. “We expect import price inflation to climb higher in the coming months as oil recovers a bit further and the dollar only gradually resumes its appreciating trend in the second half of the year.”

The imports increase was the first price rise since June 2015 and the largest one-month increase since May 2015. Overall, however, import prices in March fell 6.2% year-over-year.

The March gain in imported fuel prices, up 4.9%, came on the heels of significant declines the prior three months. Petroleum prices in particular advanced 6.5% and more than offset the 16.1% decrease in natural gas prices. Still, fuel prices declined 38.3% during the past year, with petroleum prices dropping 39.5% and natural gas prices falling 37.7%.

Nonfuel imports, meanwhile, decreased 0.1% in March for the third-consecutive month and have not increased since July 2014. Year-over-year, nonfuel import prices have decreased 2.5%. In March, falling prices for consumer goods; foods, feeds and beverages; and capital goods offset increases in prices for nonfuel industrial supplies and materials and cars.

Import prices for Chinese products decreased 0.2% in March and 1.8% over the prior year, matching the largest yearly drop in prices not seen since the year that ended November 2009. Import prices from the European Union also dropped in March by 0.1%. Prices for imports from Japan, Canada and Mexico, on the other hand, rose in March.

The 0.5% March rise in prices for nonfuel industrial supplies and materials were led by a 3.2% increase in unfinished metal prices. Also, European transportation fares declined 11.3% in March and import air freight prices dropped 12.6% over the year ending in March. Last month, agricultural prices decreased 2.5% following a 0.6% rise February; the decrease marked the largest one-month decline since August 2014, while year-over-year, agricultural prices dropped 11.1%. Lower prices for fruit, soybeans, corn and nuts led the decrease.

Prices for nonagricultural exports rose in March by 0.3% and marked the first monthly increase since May 2015, but still remained down 5.6% over the prior year. March export price increases were led by nonagricultural industrial supplies and materials, and overtook decreasing prices for automobiles.

Also of note, export air passenger fares ballooned 7.8% in March, the largest monthly increase since December 2014, but fell over the prior year by 4.6%.

- Nicholas Stern, NACM editorial associate

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