U.S. import prices continue to improve in November, to move away from deflation territory in months ahead

U.S. import prices dropped on a sequential basis in November. The import prices dropped 0.3 percent sequentially in November, as compared with the consensus expectations of a decline of 0.4 percent. Also, the October data was downwardly revised to a rise of 0.4 percent sequentially from a rise of 0.5 percent. The fall in November was predominantly due to a sharp decline in imported prices of petroleum products, which fell 4.7 percent in sequential terms. Meanwhile, elsewhere in the report price, movements were more measured.

Prices of food and beverage grew 1.5 percent in sequential terms, more than reversing the fall of 0.7 percent seen in October and resuming the strengthening in food inflation that started in the summer months. Non-petroleum products prices remained flat on a sequential basis, while import prices excluding fuels and food dropped modestly by 0.1 percent month-on-month.

On a year-on-year basis, non-petroleum import prices dropped 0.2 percent, a considerable rebound from the solid deflationary trend seen in 2014 and 2015. The recent upward trend implies that the impulse from the appreciation of the U.S. dollar has waned, said Barclays in a research report.

“We maintain our view that import prices will gradually move away from deflation territory in the coming months, following improving global commodity prices and the gradual waning of the effect of a stronger dollar”, added Barclays.

At 06:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -103.85. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex