The 1.7 percent increase in the import price index followed a revised 0.2 percent decrease the prior month, the Labor Department reported today in Washington. Prices excluding petroleum rose 0.6 percent.
Higher import costs, sustained over several months, may increase the chances U.S. companies will try to follow their foreign competitors in increasing prices. Still, Federal Reserve policy makers remain focused on risks to growth and are prepared to lower interest rates further, Chairman Ben S. Bernanke told U.S. lawmakers yesterday.
``Growth is still the biggest worry, but inflation concerns are alive,'' said Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts. ``The Fed will be cutting interest rates.''
Import prices were forecast to rise 0.5 percent, according to the median estimate of 52 economists in a Bloomberg News survey, after being previously reported as unchanged in December. Forecasts ranged from a gain of 2 percent to a drop of 1 percent.
Treasury Yields
Treasury securities, which rose earlier today, stayed higher after the figures. Ten-year note yields were at 3.76 percent at 8:38 a.m. in New York, from 3.82 percent late yesterday.
Compared with a year earlier, prices of imported goods increased 13.7 percent, the biggest jump since record-keeping began in 1982. That followed a 10.4 percent year-over-year increase in the prior month. Excluding petroleum, prices rose 3.6 percent in the 12 months to January.
The import-price index is the first of three monthly price gauges from the Labor Department. The government is scheduled to release its measure of consumer prices on Feb. 20 and wholesale prices on Feb. 26. Both reports are forecast to show that excluding fuel costs, price pressures were contained.
Fed officials have trimmed forecasts for growth after the U.S. lost jobs in January and consumer spending slowed because of falling home and stock values and rising energy costs. The central bank will cut rates a further half-point by March 18 after 2.25 percentage points of reductions since September, futures trading shows.
Bernanke Message
``The outlook for the economy has worsened in recent months, and the downside risks to growth have increased,'' Bernanke told the Senate Banking Committee in Washington yesterday. ``To date, inflation expectations appear to have remained reasonably well anchored.''
The price of imported petroleum and petroleum products rose 5.5 percent after a decline of 1.9 percent the prior month. Prices were 67 percent higher than at the same time a year earlier.
Crude oil prices, which reached $100 a barrel on Jan. 2 on the New York Mercantile Exchange, the highest since trading began in 1983, have retreated in recent weeks.
Excluding all fuels, including natural gas, import prices rose 0.7 percent for the month and were up 3.3 percent for the 12-month period.
Food and beverage imports were 3.1 percent more expensive, the biggest gain since March 2005. Costs of imported industrial supplies rose 4 percent and were up 37 percent from a year earlier, the biggest year-over-year increase since March 2000.
Dollar Falls
The dollar, which weakened nearly 8 percent since the beginning of 2007 against a trade-weighted basket of currencies of major U.S. trading partners, also is making imports more expensive.
The cost of imported capital goods fell 0.2 percent, the first decrease in nine months, today's report showed. Prices of imported automobiles, parts and engines were unchanged and costs for imported consumer goods excluding autos rose 0.3 percent.
Some companies are getting hurt even after attempts to recover costs. Kraft Foods Inc., the world's second-largest foodmaker, last month said its fourth-quarter profit fell, in part because price increases on cheese didn't cover dairy expenses that surged 50 percent from the year-earlier quarter.
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