Petroleum Prices Propel U.S. Import Price Index Up 1.1%

By John S. McClenahen The U.S. Labor Department's Import Price Index increased 1.1% in March, its largest increase since September 2000. A 15.7% increase in petroleum prices was responsible, something that should not surprise anyone who has been tracking rising political tensions in the Middle East. March's increase in petroleum prices was the largest in nearly three years. "The uncertainties of the Middle East mean forecasts of oil prices can go terribly awry," notes Merrill Lynch & Co., New York. "But it's clear that the latest price run-up reflects political risk, not the fundamentals of the supply-demand balance. Our energy team estimates that $3 to $5 per barrel of the current price reflects a 'war' premium." With petroleum taken out of the calculations, U.S. import prices were unchanged in March. As the price of imported oil was rising, the prices for U.S. exports also were increasing. They increased 0.3% in March, the largest one-month rise since September 2000. Prices for both agricultural and non-agricultural exports rose last month, with capital-goods and automotive exports edging up 0.1%.

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