U.S. Import Prices Rise; Consumer Debt Slows

U.S. import prices rose by much more than expected in March in a reminder of inflationary risks that could test the patience of the Federal Reserve.

At the same time, U.S. consumers added to their debt at a slower pace in February, the Federal Reserve said in a report released Wednesday.

Powered by a jump in fuel prices, the cost of goods imported into the United States rose 0.9%, the sixth straight gain, after a 0.4% advance in February, the Labor Department said Wednesday.

March’s rise was nearly double Wall Street forecasts for a 0.5% gain.

Taken on their own, economists said, the numbers were not a red alert for inflation because only around 11% of U.S. goods prices are imports.

But it is a warning that the country’s powerful economic recovery will feed into prices at some point.

“You look for gathering evidence and this is just one piece of evidence that prices have bottomed, and now we have to see how far they go on the upside,” said Gary Bigg, an economist at Bank of America Securities.

St. Louis Federal Reserve Bank President Bill Poole said Tuesday that the Fed should “act aggressively when inflation risks change, either up or down,” and said he saw risks tilted slightly more to the upside.

Export prices were up 0.9%, the largest gain since April 1995’s 1% rise, the Labor Department said. Imported food costs rose 0.8% after gaining a revised 1.3% in February.

The Fed said Americans’ outstanding credit, which excludes mortgage debt, rose by $4.1 billion to a seasonally adjusted $2.02 trillion in February.

January consumer credit growth was revised up to a $15.8-billion gain from the initially reported $14.3-billion surge.

The pace of credit use reflected a sharper slowdown than Wall Street had expected. Forecasters had anticipated a $7.7-billion gain in February.

As in recent months, nonrevolving credit -- which includes fixed-term loans for cars, boats and tuition expenses -- posted a larger gain than revolving debt, rising by $2.6 billion in February.

The growth in nonrevolving credit was aided by continued low interest rates on autos. The average rate from the finance arms of the U.S. Big Three automakers dipped to 3% from 3.2% in January, the Fed said.

Revolving debt, which tracks charge and credit card usage, rose by a smaller $1.6 billion in February.

January’s revised growth in credit outstanding was the largest since May 2003, when credit surged by $17.9 billion.