US: Import and Export Prices

Thu Nov 16 07:30:00 CST 2017

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.4% 0.1% to 0.7% 0.2% 0.7% 0.8%
Export Prices - M/M change 0.1% -0.1% to 0.7% 0.0% 0.8% 0.7%
Import Prices - Y/Y change 2.5% 2.7%
Export Prices - Y/Y change 2.7% 2.9% 2.8%

Cross-border price pressures are flat like other inflation readings. Import prices managed only a 0.2 percent increase in October which is half the expected gain. And excluding petroleum which swung sharply higher in the month, import prices rose only 0.1 percent. The year-on-year rate for ex-petroleum import prices is only 1.4 percent.

Export prices were unchanged in October despite a 1.9 percent monthly climb in agricultural prices. The year-on-year gain for agricultural prices, at 3.5 percent, is perhaps the most favorable reading in the report.

But prices for finished goods, whether on the import or export side, remain stubbornly flat with about half of these annual readings tilted in the negative column including export prices of consumer goods which are down 0.7 percent. The lack of pressure here points to no pass-through for recent gains in petroleum costs.

There have been glimmers of wage pressures in recent months but this week's inflation readings re-establish the expansion's anomaly -- that full employment is not triggering any inflation.

Market Consensus Before Announcement
Oil prices skewed September's import & export price report sharply higher, to gains of 0.7 percent for imports and 0.8 percent for exports. Core readings, however, showed much less pressure with cross-border prices for finished goods remaining flat. Econoday's consensus for October import prices is 0.4. percent with export prices at 0.1 percent.

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.