US: Import and Export Prices

September 19, 2017 07:30 CDT

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.4% 0.0% to 1.0% 0.6% 0.1% -0.1%
Export Prices - M/M change 0.2% 0.1% to 0.5% 0.6% 0.4% 0.5%
Import Prices - Y/Y change 2.1% 1.5% 1.2%
Export Prices - Y/Y change 2.3% 0.8% 0.9%

Cross border inflation pressures picked up noticeably in August with both import prices and export prices posting 0.6 percent gains that easily beat Econoday's consensus forecasts. Petroleum prices surged 4.8 percent in the month in what may reflect at least in part indirect pressures from Hurricane Harvey at month end. But other prices show solid gains as non-petroleum rose 0.3 percent which is very strong for this reading. Pressure here includes incremental gains for finished goods prices which are usually dead flat.

Finished goods prices on the export side also show rare and constructive incremental gains. Export prices for industrial supplies were very strong in the month which in part reflects the month's gain in petroleum prices. Agricultural prices, which usually dominate the export side, rose only 0.1 percent in weakness that could not hold down the broad strength of the export side.

Year-on-year prices are accelerating, at 2.1 percent for imports and 2.3 percent for exports. This report echoes the strength in last week's core reading for consumer prices and may well boost confidence among policy makers at this week's FOMC meeting to begin withdrawing balance sheet stimulus.

Market Consensus Before Announcement
Month-end pressure for energy prices, the result of Hurricane Harvey, may give a lift to import prices with the Econoday consensus at 0.4 percent vs a marginal 0.1 percent gain in July and contractions in the two prior months. Export prices, at a consensus gain of 0.2 percent, are expected to moderate from July's agricultural-led 0.4 percent gain.

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.