In January 2018, import prices rose by 1% in the United States in contrast to a forecasted rise of 0.6%; the forecasted rise for December 2017 was 0.2% but turned out to only be 0.1%.
What caused such an unexpected hike in import prices in January 2018? There are two factors at play here: the cost of imported petroleum, and the weakening US dollar against foreign trade partners’ currencies.
In January 2018, the import price of petroleum saw a skyrocketing increase from 2.3% in December 2017, to 4.3%. If we omit the drastic rise in price of petroleum from the import price of goods and services, the latter still rose by 0.4%. A 0.4% increase equates to the highest rise in the price of imported goods and services that the US has seen since July 2016. The falling US dollar is partially to blame.
With the US dollar weakening, imports are becoming more expensive, and exports are being stimulated. The domestic currency is experiencing trouble because the US has an infamous trade deficit. This deficit is caused by the US importing more than it exports, which causes the exchange rate to weaken against foreign currencies.
There is not a whole lot of control that individual business owners have over rising import prices; It is in the economy’s nature to be constantly fluctuating. But while increasing prices can be of concern, it is best to make sure that the rest of your finances are in order.
When running an import/export business, the fine details are everything. Customs brokers specialize in knowing the fine details like the back of their hand.