Stronger dollar should continue to keep US import prices down in the near term

US imported inflation rose after seven consecutive declines, following a rebound in energy prices. Import prices increased 0.4% m/m (-9.4% y/y) in January, below our forecast (0.6% m/m) but above consensus (0.2% m/m) expectations. 

Prices for petroleum and petroleum product imports rose 8.1% m/m, broadly in line with our expectation of a bounce back after the sharp decline during January and December. 

Capital Economics notes in a report on Thursday:

• The softness in import prices in recent months has been driven by lower energy prices, as well as dollar strength. 
  
  
• The rise in oil prices during February contributed to the stabilization in overall imported inflation, and we expect the drag from oil energy prices to fade. 
  
  
• However, a stronger dollar should continue to keep imported prices down in the near term.