US: Import and Export Prices

Fri Feb 16 07:30:00 CST 2018

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.6% 0.3% to 0.6% 1.0% 0.1% 0.2%
Export Prices - M/M change 0.3% 0.2% to 0.3% 0.8% -0.1% 0.1%
Import Prices - Y/Y change 3.6% 3.0% 3.2%
Export Prices - Y/Y change 3.4% 2.6% 2.8%

Underscoring the strength of Wednesday's core reading for the CPI, import prices surged a far stronger than expected 1.0 percent in January. And the gain isn't tied entirely to an upswing for energy as non-petroleum prices rose an unusually strong 0.5 percent. A rare 0.5 percent price jump for imported vehicles is a key detail of the report as are higher prices for imported food & beverages.

The export side shows very similar strength, up 0.8 percent overall and including even greater traction for finished goods with capital goods up 0.5 percent in the month and consumer and vehicle export prices up 0.3 percent which are outsized gains for these readings.

Year-on-year rates are back near their best readings of the expansion, at 3.6 percent for imports and 3.4 percent for exports. But it's import prices that are in special focus as expected gains here, tied to a yearlong decline in the dollar, will act to inflate the economy and after today's report are now an increasingly important factor that hawks at the FOMC will be watching with caution.

Market Consensus Before Announcement
Import prices have shown pressure in recent months but not when excluding petroleum where readings have been flat. December's results were weak throughout including for export prices. Tangible improvement is the call for January where the consensus for import prices is a gain of 0.6 percent and 0.3 percent for export prices.

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.