The U.S. Import Price Index rose 0.2 percent in February, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The increase followed a 0.9 percent decline in January and was led by an upturn in petroleum prices. The price index for exports increased for the fourth consecutive month, advancing 0.7 percent in February.
The best part of this report was the year over year change. From February 2006 to February 2007 import prices increased 1.3%.
However, take a look at the statements on oil:
Prices for imports increased 0.2 percent in February as a 2.0 percent increase in petroleum prices more than offset a modest decline in nonpetroleum prices. The advance in petroleum prices followed declines in four of the previous five months, and despite the February upturn petroleum prices decreased 2.6 percent over the past year.
Take a look at the chart below on oil. Remember we're going into the summer driving season.
Prices of U.S. imports rose less than forecast in February, held down by lower costs for metals and machinery that may help keep a lid on inflation.
The 0.2 percent increase followed a 0.9 percent drop in January, the Labor Department said today in Washington. Prices excluding petroleum fell 0.1 percent. Separate figures from the Commerce Department showed the current-account deficit shrank last quarter to $195.8 billion.
The cheapest imported business equipment in almost a year is among factors that may make it easier for the Federal Reserve to keep interest rates unchanged. Policy makers will see reports on wholesale and consumer prices in coming days as they prepare for next week's interest-rate meeting.
``This is definitely a Fed-positive report,'' said Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``It supports the case for the Fed to sit tight and continue to watch inflation pressures recede.''
I would add, this is a Fed positive report for now. Oil still remains a wild card in deck.