Prices of goods imported into the U.S. rose more than forecast in April as a slumping dollar and growing economies overseas pushed up the cost of fuel and food.
The 2.2 percent increase in the import-price index followed a revised 2.6 percent gain in March, according to figures from the Labor Department today in Washington. Other reports showed distributors boosted inventories and small businesses lost confidence.
The increase in prices from overseas may put pressure on companies like Whole Foods Market Inc. (WFMI) to pass on higher costs, calling into question Federal Reserve Chairman Ben S. Bernanke’s view that the surge in commodities will have temporary effect on inflation. The report on small businesses showed the share of those surveyed who planned to raise prices held in April at the highest level in 30 months.
“While many policy makers have described recent commodity cost increases as ‘transitory,’ the reality is that even at the small business level, producers are increasingly more confident in their ability to pass on costs to customers,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York, said in a note to clients.
The median forecast of 51 economists surveyed by Bloomberg News called for a 1.8 percent increase in import prices last month. Projections ranged from increases of 1 percent to 2.5 percent.
Compared with a year earlier, import prices increased 11 percent, exceeding the 10 percent increase projected by economists surveyed and the biggest 12-month gain in a year.
Shares Climb
Stocks rose, sending the Standard & Poor’s 500 Index higher for a third straight day, as companies including Dean Foods Co. and Fossil Inc. forecast earnings that topped analysts’ projections. The 500 Index climbed 0.4 percent to 1,352.25 at 11:43 a.m. in New York.
Confidence among small companies fell to a seven-month low in April, damped by a deteriorating outlook for the economy, a report from the National Federation of Independent Business showed. The Washington-based group’s optimism index decreased to 91.2, the lowest since September, from 91.9 the prior month. Seven of the measure’s 10 components dropped.
Small businesses planning to increase prices held at a net 24 percent of owners for a second month, according to the report.
Increasing sales are also prompting wholesalers to increase stockpiles, according to figures from the Commerce Department. Inventories climbed 1.1 percent in March as sales jumped 2.9 percent. At the current pace of sales, distributors had enough goods on hand to last 1.13 months, matching the level in June 2008 as the lowest on record.
Fuel, Food
The report on prices from overseas showed the cost of imported petroleum increased 7.2 percent from the prior month and was up 37 percent from a year earlier. Excluding all fuels, import prices climbed 4.3 percent from April 2010, matching the prior month’s 12-month increase as the biggest since October 2008.
Imported food was 1.8 percent costlier last month and was up 20 percent from a year earlier, the biggest 12-month increase since records began in 1977.
Whole Foods, the largest U.S. natural-goods grocer, says prices may continue to climb later this year, according to A.C. Gallo, president and chief operating officer of the Austin, Texas-based company. Beef, dairy, corn and soy are major among commodities experiencing inflation, he said.
Pass Through
“We have been able to pass some of them through,” Gallo said in a May 4 earnings call with analysts, referring to cost increases. “There is some uncertainty based on not quite understanding what kind of inflation we’ll be seeing in our costs and what will be able to pass through.”
Following a two-day meeting in Washington last month, Fed officials said the effect on inflation from the jump in fuel and other commodities will probably be “transitory,” according to a statement released April 27.
The officials also lowered their forecasts for U.S. growth, saying the economy is recovering at a “moderate pace,” and agreed to finish $600 billion of bond purchases on schedule in June, according to the statement.
A weakening U.S. currency has also made imported goods more expensive. The dollar fell 7.7 percent against a basket of major currencies from the beginning of the year to the end of April.
The dollar has since strengthened, gaining 2.4 percent from April 29 as commodity prices have fallen.
Today’s report showed the cost of goods from China rose 0.4 percent, while those from Japanwere increased 0.3 percent. Goods from Latin America climbed 3.5 percent and those from the European Union increased 0.8 percent. Prices of Canadian imports rose 2.4 percent, and goods from Mexico advanced 2.5 percent.
The import-price index is the first of three monthly price gauges from the Labor Department. Producer prices are due May 12 and the consumer-price index on the following day. The Bloomberg survey median for those measures indicates inflation excluding volatile food and fuel expenses remains contained.
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