US: Import and Export Prices

Tue Apr 12 07:30:00 CDT 2016

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 1.0% 0.1% to 2.0% 0.2% -0.3% -0.4%
Export Prices - M/M change 0.0% -0.4% to 0.4% 0.0% -0.4% -0.5%
Import Prices - Y/Y change -6.2% -6.1%
Export Prices - Y/Y change -6.1% -6.0%

Yes, a 6.5 percent monthly surge in petroleum prices did make for a 0.2 percent overall gain for import prices in March but when excluding petroleum, import prices fell 0.2 percent. In a telling sign of how deflationary cross-border price pressures have been, import prices excluding petroleum last posted a gain way back in March 2014.

Export prices came in unchanged on the month which is, nevertheless, the best reading since May last year. Prices for exported industrial supplies rose 0.7 percent, offset by a 2.5 percent monthly decline for agricultural products where, in an important reading for farmers, year-on-year prices are down 11.1 percent. Total year-on-year export prices are down 6.1 percent with import prices down 6.2 percent, both readings showing little improvement from recent trend.

Country data for imports show the greatest monthly declines for NICs( newly industrialized countries) at minus 0.5 percent and China at minus 0.2 percent. Year-on-year, price declines are steepest for Canada and Latin America, at minus 12.5 and at minus 9.7 percent respectively, both strong reflections of low oil and commodity prices.

Prices of finished goods, both imported and exported, are down to flat with year-on-year readings for all categories either flat or slightly negative. Global deflation is the theme and an initial rise for oil-based prices isn't yet making much impact.

Market Consensus Before Announcement
Import & export prices have been suffering through a long run of contraction but February showed improvement and more is expected for March. The consensus is calling for an oil-based 1.0 percent jump for import prices, vs February's minus 0.3 percent, and no change for export prices, vs minus 0.4 percent in February. This year's roughly 5 percent decline in the dollar should begin to ease deflation on the import side.

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.