US: Import and Export Prices

Thu Jun 11 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous
Import Prices - M/M change 0.9% 0.0% to 2.3% 1.3% -0.3%
Export Prices - M/M change 0.1% -0.2% to 0.2% 0.6% -0.7%
Import Prices - Y/Y change -9.6% -10.7%
Export Prices - Y/Y change -5.9% -6.3%

May import prices advanced a monthly 1.3 percent in May, after slipping 0.2 percent in April. The May increase was the first monthly rise since the index advanced 0.3 percent in June 2014 and the largest one month increase since the index rose 1.4 percent in March 2012. However, on the year, import prices dropped 9.6 percent and have not recorded a 12-month rise since the index advanced 0.9 percent between July 2013 and July 2014. Excluding fuel, import prices were unchanged after declining 0.3 percent in April.

Prices for import fuel jumped 11.8 percent in May following a 1.3 percent advance in April and the largest monthly advance since the index increased 16.0 percent in June 2009. A 12.7-percent jump in petroleum prices in May led the advance in overall fuel prices.

May export prices were up 0.6 percent after declining 0.7 percent in April. The May advance was the largest rise for the index since a 0.9-percent increase in March 2014. In May, rising nonagricultural prices more than offset lower agricultural prices. On the year, export prices declined 5.9 percent.

Agricultural export prices were down 1.0 percent, continuing the downward trend over the past 12 months. In May, falling wheat and corn prices more than offset higher prices for fruit and nuts. Excluding agriculture, export prices were up 0.7 percent, led by higher prices for nonagricultural industrial supplies and materials and automotive vehicles which more than offset lower prices for capital goods and consumer goods. Nonagricultural export prices fell 4.6 percent for the year ended in May.

Market Consensus Before Announcement
There have been some hints that price pressures may be building but not many in import & export prices where most readings have been in outright contraction for a full year. The strong dollar is making imports cheaper while softness in foreign economies is keeping down prices on the export side. But energy prices are rebounding and gains, including a strong gain for import prices, are expected for May.

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.