U.S. import prices unchanged as petroleum costs drop

WASHINGTON (Reuters) - U.S. import prices were unexpectedly flat in April as a decline in the cost of petroleum offset gains in food and other products, a further sign that inflation has probably peaked, though it will remain elevated.

The unchanged reading in import prices followed a 2.9% surge in March, the Labor Department said on Friday. In the 12 months through April, import prices rose 12.0% after accelerating 13.0% in the year through March. Economists polled by Reuters had forecast import prices, which exclude tariffs, would climb 0.6%.

Import prices increased 6.8% over the first quarter.

Government data this week showed monthly consumer prices increased at the slowest pace in eight months, while the gain in producer prices was the smallest since last September.

With oil prices drifting higher in May, monthly import, consumer and producer prices are likely to pick up. Annual inflation rates are expected to continue edging lower, though likely to stay above the Federal Reserve's 2%.

The deceleration is mostly the result of last year's big increases dropping out of the calculation.

The Fed last week raised its policy interest rate by half a percentage point, the biggest hike in 22 years, and said it would begin trimming its bond holdings next month. The U.S. central bank started raising rates in March.

Imported fuel prices dropped 2.4% last month after soaring 17.3% in March. Petroleum prices declined 2.9%, while the cost of imported food increased 0.9%. Prices of imported capital goods rose 0.4%, matching March's gain. The cost of imported consumer goods excluding motor vehicles was unchanged. Prices of imported motor vehicles and parts climbed 0.3%.

Excluding fuel and food, import prices rose 0.4%. These so-called core import prices advanced 1.3% in March. They increased 6.9% on a year-on-year basis in April.

Some of the slowdown in the monthly core import price gains reflect the dollar's strength against the currencies of the United States' main trade partners. The greenback has gained about 2.65% on a trade-weighted basis since the Fed started raising interest rates.

The price of goods imported from China advanced 0.2% after rising 0.5% in March. They increased 4.6% on a year-on-year basis.

The report also showed export prices rose 0.6% in April after surging 4.1% in March. Prices for agricultural exports advanced 1.1%, a slowdown from the 4.3% acceleration logged in March. Higher prices in April for corn, cotton, meat and nuts more than offset lower prices for wheat and soybeans.

Nonagricultural export prices rose 0.5%. Export prices increased 18.0% on a year-on-year basis in April. That followed an 18.6% advance in March.

(Reporting by Lucia Mutikani; Editing by Mark Potter and Paul Simao)