US: Import and Export Prices

Wed Jan 10 07:30:00 CST 2018

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.4% 0.2% to 0.8% 0.1% 0.7% 0.8%
Export Prices - M/M change 0.3% 0.2% to 0.4% -0.1% 0.5%
Import Prices - Y/Y change 3.0% 3.1% 3.3%
Export Prices - Y/Y change 2.6% 3.1%

Despite a sizable 2.0 percent rise in petroleum, import prices rose only 0.1 percent in December which falls short of Econoday's low estimate. Import prices excluding petroleum fell 0.2 percent in a disappointing result that will heighten concern over the lack of inflation.

December's export prices are likewise weak, down 0.1 percent overall with agricultural prices down 0.4 percent. Prices for the nation's finished exports remain dead flat, up only 0.1 percent for capital goods in the month, down 0.1 percent for vehicles with consumer goods up 0.2 percent.

Year-on-year rates are led by overall imports at a respectable looking plus 3.0 percent with the ex-petroleum reading, however, up only 1.3 percent. Yearly prices of finished imports are minus 0.3 percent for vehicles, plus 0.2 percent for consumer goods, and up 0.7 percent for capital goods. Total export prices are up 2.6 percent with agricultural prices up only 1.8 percent. The yearly breakdowns for finished goods are similar to those of imports, all flat.

This report had been showing some pressure in prior reports as have producer prices which will be updated tomorrow. But consumer prices haven't been showing much life at all and today's report won't be raising expectations for any traction to appear anytime soon.

Market Consensus Before Announcement
Cross-border price pressures picked up sharply in November, rising 0.7 percent for import prices on higher petroleum costs and up 0.5 percent for export prices on industrial supplies where petroleum prices were also a factor. But November's pressures did not pass through as finished prices remained dormant. Econoday's consensus for December import prices is 0.4 percent with export prices at 0.3 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.