US: Import and Export Prices

Thu Apr 12 07:30:00 CDT 2018

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.2% -0.1% to 0.5% 0.0% 0.4% 0.3%
Export Prices - M/M change 0.3% 0.0% to 0.4% 0.3% 0.2%
Import Prices - Y/Y change 3.6% 3.5% 3.4%
Export Prices - Y/Y change 3.4% 3.3% 3.2%

Import prices came in below expectations at no change in a March report where flat is really the only description. When excluding petroleum, import prices managed only a 0.1 percent gain.

Prices of food imports did rise 0.6 percent in the month but petroleum fell 1.3 percent. Finished prices show no pressure with consumer goods down 0.1 percent and vehicles down 0.2 percent.

Export prices rose 0.3 percent in March boosted by a 3.4 percent jump in agricultural prices though the related year-on-year rate is tame at 3.0 percent vs 3.4 percent for all exports. Finished prices here are also flat with consumer goods unchanged and capital goods and vehicles posting only 0.1 percent gains.

The dollar may be falling but the inflationary effect on import prices has been limited. The 3.6 percent year-on-year rate for import prices is the highest since April last year but increases underway have been marginal. The decline in the dollar, down about 10 percent last year and down several percentage points so far this year, has yet to dramatically raise import prices, the result perhaps of discounting among foreign sellers who are protecting their market share.

Market Consensus Before Announcement
Inflationary effects of the lower dollar are what to watch for in import prices though Econoday's March consensus is a modest 0.2 percent gain. In February, import prices rose 0.4 percent despite a sharp decline in petroleum prices. Export prices are seen rising 0.3 percent in March.

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.