U.S. import prices rose in December, boosted by higher prices for petroleum products, but a strong dollar kept underlying imported inflation in subdued.
The Labor Department said on Thursday import prices increased 0.4 percent last month after an upwardly revised 0.2 percent decline in November.
Economists polled by Reuters had forecast import prices advancing 0.7 percent last month after a previously reported 0.3 percent drop. In the 12 months through December, import prices jumped 1.8 percent, the largest gain since March 2012, after edging up 0.1 percent in the 12 months through November.
Import prices are rising as the drag from lower oil prices fades. Oil prices have risen above $50 per barrel. But underlying import prices are likely to remain soft amid sustained dollar strength.
The dollar gained 4.4 percent against the currencies of the United States' main trading partners last year.
Further gains in the greenback are likely against the back-drop of President-elect Donald Trump's pledge to boost spending and cut taxes. The fiscal stimulus is expected to stoke inflation and bolster economic growth, which could prompt the Federal Reserve to raise interest rates at a faster pace than currently envisaged.
The U.S. central bank lifted its benchmark overnight interest rate by 25 basis points to a range of 0.50 percent to 0.75 percent in December. The Fed forecast three rate hikes this year. Lower oil prices and the bullish dollar had combined to dampen imported inflation.
Imported petroleum prices increased 7.9 percent last month after dropping 3.0 percent in November. Import prices excluding petroleum fell 0.2 percent after being unchanged the prior month.
The cost of imported food fell 1.4 percent, the biggest drop since February, after surging 1.3 percent in November.
Prices for imported capital goods fell 0.2 percent, declining for a third straight month. The cost of imported automobiles dipped 0.1 percent. Imported consumer goods prices excluding automobiles fell 0.3 percent last month.
The report also showed export prices rose 0.3 percent in December after slipping 0.1 percent in November. Export prices were up 1.1 percent from a year ago.
That was the first increase since August 2014 and followed a 0.3 percent drop in November.