US: Import and Export Prices

Thu Mar 09 07:30:00 CST 2017

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.2% 0.0% to 0.3% 0.2% 0.4% 0.6%
Export Prices - M/M change 0.2% 0.0% to 0.3% 0.3% 0.1% 0.2%
Import Prices - Y/Y change 4.6% 3.7%
Export Prices - Y/Y change 3.1% 2.3%

The 0.2 percent rise for import prices in February looks soft but there are pressures within. Excluding fuels, import prices rose 0.3 percent for the largest increase since July. Industrial supplies outside of petroleum rose 1.4 percent while food products rose 1.0 percent. An important sign of pressure comes from the overall year-on-year rate which is at 4.6 percent for its highest level in 5 years, since February 2012.

Export prices rose 0.3 percent in February to hit Econoday's top estimate. Agricultural products are also a major factor on the export side, rising 1.4 percent in the month. Still wider pressure is apparent, centered in durable goods and including two months of rare price strength for exported capital goods. Year-on-year, total export prices rose 8 tenths from January to 3.1 percent, the highest since December 2011.

Pressure in year-on-year rates reflects easy comparisons against very low energy prices this time last year. Currently, oil prices have been holding steady pointing to continued overall pressure, and building annual rates, in the months ahead. Should average hourly earnings move significantly higher in tomorrow's employment report, talk of an inflationary flashpoint is certain to build.

Market Consensus Before Announcement
Import prices have been on the rise as energy prices continue to recovery. Outside of petroleum, however, there has been little pressure. Export prices, getting no lift from agricultural prices, have also been flat. The Econoday consensus calls for a modest 0.2 percent increase for both import and export prices in February.

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 compiled 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.