US: Import and Export Prices

Fri May 11 07:30:00 CDT 2018

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.5% 0.3% to 0.7% 0.3% 0.0% -0.2%
Export Prices - M/M change 0.3% 0.2% to 0.3% 0.6% 0.3%
Import Prices - Y/Y change 3.3% 3.6% 3.3%
Export Prices - Y/Y change 3.8% 3.4%

Import prices, up 0.3 percent in April, got a boost from a rise in oil but were otherwise flat, at only a 0.1 percent increase excluding petroleum. Prices of finished imports show almost no pressure at all, hovering near zero on a monthly basis and barely over zero on a yearly basis. Import prices of industrial supplies did rise 1.0 percent in the month reflecting the rise in oil and also perhaps tariffs on steel and aluminum as durable supplies rose 0.4 percent with iron and steel mill products advancing a monthly 4.0 percent.

By country, import prices with Canada are going up the most, 0.6 percent higher in April for a year-on-year 6.2 percent. Import prices from Europe also rose 0.6 percent in the month with this year-on-year gain at 3.7 percent. These are offset, however, by very weak prices from China, down 0.1 percent in the month, and Japan, up only 0.1 percent, with both of these yearly rates at a very low plus 0.2 percent.

Export prices do show pressure, up 0.6 percent in the month despite a 1.2 percent decline in agricultural prices. Year-on-year agricultural prices are up only 1.4 percent and are holding back overall export prices which are up 3.8 percent. One positive sign of price traction is exports of capital goods, which is the nation's key strength and where prices rose 0.4 percent in the month for a year-on-year rate of 2.0 percent which looks subdued but is far and away the highest for any finished goods in this report.

Last year's decline in the dollar gave only a limited lift to import prices, likely reflecting discounting among foreign sellers protecting their U.S. market share. And with the dollar basically flat so far this year, import prices are not likely to be a source of price pressures this year either. Like all the inflation data for April, beginning with last week's average hour earnings and including yesterday's consumer price report, today's import & export data won't be raising any alarms at the Federal Reserve of overshooting.

Market Consensus Before Announcement
Inflationary effects of the lower dollar and metal tariffs are the risks for import prices which forecasters see rising a less-than-moderate 0.5 percent in April. Export prices are seen up a moderate 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.