US records weak import prices in June on decline in nonpetroleum categories

US registered weak import prices in June. The prices rose a modest 0.2 percent month-on-month, significantly softer than the consensus projection of 0.5 percent. Import prices had grown solidly in the months of May and April. Petroleum prices grew 6.4 percent month-on-month in June; however, this increase was countered by declines in most of the other categories.

Nonpetroleum products’ prices dropped 0.3 percent on a sequential basis, with three out of five of its subcomponents dropping. Total import prices, on a year-on-year basis, fell 4.8 percent, while nonpetroleum prices dropped 1.9 percent.

Import prices in the US have been weighed on by two factors recently – the appreciation of US dollar and the drop in oil prices, noted Barclays in a research report. Given that the impacts of dollar’s past appreciation and the lower oil prices have largely diminished, the renewed softness in import prices is a cause of worry, according to Barclays. The weakness in import prices should be watched closely as it might indicate subdued demand, either external or domestic.