US: Import and Export Prices

Wed May 13 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.4% -0.3% to 1.0% -0.3% -0.3% -0.2%
Export Prices - M/M change 0.1% -0.2% to 0.3% -0.7% 0.1% 0.1%
Import Prices - Y/Y change -10.7% -10.5%
Export Prices - Y/Y change -6.3% -6.7%

There were some expectations for energy-related pressure to appear in today's import & export price report but the pressure is not enough to raise general prices. Import prices fell 0.3 percent in April which is well below the Econoday consensus for a 0.4 percent gain. Excluding petroleum products, where import prices jumped 1.0 percent in the month, prices are still in the negative column, at minus 0.4 percent.

Export prices, pulled down by a drop in prices for farm products, really fell in the month, down 0.7 percent vs the Econoday low-end estimate for minus 0.2 percent.

Year-on-year, import prices are down a very steep 10.7 percent with export prices down 6.3 percent. Oil may be bouncing back, but the effect so far on the price picture is limited, once again giving the edge, at least for now, to the doves at the Fed.

Market Consensus Before Announcement
The Fed expects to see an uptick in inflation and import prices for April are expected to offer some of the very first evidence. Boosted by higher energy prices, import prices are expected to rise 0.4 percent which would be the strongest gain since March last year. Export prices, seen at plus 0.1 percent for a second month, broke into the plus column in March for the first time since July last year.

Import price indexes are compiled for the prices of goods that are bought in the United States but produced abroad and export price indexes are developed for the prices of goods sold abroad but produced domestically. These prices indicate inflationary trends in internationally traded products.

Changes in import and export prices are a valuable gauge of inflation here and abroad. Furthermore, the data can directly impact the financial markets such as bonds and the dollar. The bond market is especially sensitive to the risk of importing inflation because it erodes the value of the principal (the original investment) which is paid back when the bond matures. It also decreases the value of the steady stream of interest rate payments on this type of security. Inflation leads to higher interest rates and that's bad news for stocks, as well. By monitoring inflation gauges such as import prices, investors can keep an eye on this menace to their portfolios.