In what's proving to be a trend, prices on imported goods in the United States in March fell, based on the latest numbers released by the government.
U.S. import prices have decreased eight times in the last nine months.
U.S. import prices decreased 0.3 percent in March, according to newly released trade data from the U.S. Labor Department. That marks the eighth time in the last nine monthly reports that values on imports have diminished.
Economists say that the continued decline in import prices largely stems from the glut of oil on the world market. In a poll conducted by Reuters prior to the Labor Department's release of import price data, economists predicted that import prices would slip by 0.3 percent. In the last 12 months starting in March, import prices have slid by more than 10 percent, the largest drop off witnessed in nearly six years.
Also influencing import prices, according to Joshua Shapiro, MFR Inc.'s chief economist, is the rising value of the dollar.
"Recent dollar strength indicates that core import prices are likely to be under considerable downward pressure in the months ahead," said Shapiro, according to the Wall Street Journal. "This will help to keep prices of goods at the consumer level under wraps."
Typically when the economy exhibits consistent improvements, the Federal Reserve will increase interest rates. A number of economic factors have suggested that conditions are improving, like a lower unemployment rate and more than 60 consecutive months of private sector job growth. However, because consumer prices aren't rising at the pace the central bank was forecasting, the Fed appears to be hedging its bets.
"Some of the weakness in inflation likely reflects continuing slack in labor and product markets," said Fed chair Janet Yellen at a speech in San Francisco in February, WSJ reported. "However, much of this weakness stems from the sharp decline in the price of oil and other one-time factors that, in the [Federal Open Market Committee's] judgment, are likely to have only a transitory negative effect on inflation, provided that inflation expectations remain well anchored."
Given current conditions, economists think interest rates won't increase until some time in 2016. Interest rates to rise in 2016
It's been quite a while since interest rates have risen in the United States. As noted by Reuters, short-term interest rates have been at or near zero going back to December 2008. If inflation starts to pick up steam as it's expected to, economists forecast that the Fed will probably make its long anticipated rate hike move in 2016.
Meanwhile, although import prices overall ticked lower in March, petroleum values exhibited strength. The Labor Department reported that values in imported petroleum increased 0.8 percent, this after climbing 5.2 percent in February.
Crude oil – a commodity that U.S.-based companies don't export – has lost much of its value, which has also had a broad-based impact on import prices. Since June, crude oil prices are down 50 percent due to added supply that hasn't been countered by rising demand, Reuters reported.