Import Prices Rise Thanks to Oil, Dollar

The cost of goods imported into the United States rose in February as oil prices soared, and higher prices at the gas pump in recent weeks put a damper on consumer confidence, according to economic data released Friday.

Import prices were 0.8% higher in February compared with January, and 6.1% above February 2004 levels, the Labor Department said. Export prices were unchanged in February from the previous month and up 3.4% from a year earlier.

Petroleum prices jumped 3.9% last month and were nearly 30% higher than a year earlier. Higher prices for commodities also fueled a 2% rise in industrial supply prices from January and a 19% jump for the year.

Richard DeKaser, chief economist at National City Corp. in Cleveland said rising prices for oil and other commodities were playing a prominent role in boosting prices for traded goods. But the larger issue, he added, was that “we are now seeing the effect of the significant changes in exchange rates.”

The dollar has lost about a third of its value against a basket of currencies since early 2002. A weaker dollar typically makes imports more expensive and exports cheaper.

Over the three-year period, the effects of the dollar’s sharp depreciation on import prices have been muted as suppliers chose to accept eroding margins rather than risk losing sales to lower-priced competitors.

But many economists, including Federal Reserve Chairman Alan Greenspan, have said they expect import prices to start creeping higher as foreign companies’ tolerance of tight profit margins wanes.

The University of Michigan’s preliminary reading of its consumer confidence index for March slipped to 92.9 from a final February reading of 94.1. The consensus forecast from Wall Street economists had been for a rise to 95.

Economists said higher gasoline prices were largely to blame for the slip in confidence.