Import prices are down for a ninth month in a row, falling a much steeper-than-expected 0.6 percent in March for an annual decline of 4.6 percent. This is the steepest annual decline since the beginning of the pandemic lockdowns in May 2020. Export prices are down 0.3 percent in March's report for the seventh decline in the last nine months. This annual rate is down 4.8 percent, also the steepest decline since May 2020.

And it's more than just energy prices that are behind the decline in import prices. When excluding all fuels, import prices fell 0.5 percent in March for annual contraction of 1.5 percent. Imports of foods, feeds & beverages fell 0.5 percent on the month and consumer goods 0.3 percent. Industrial supplies, where energy prices play a substantial part, dropped 2.0 percent with this annual decline at 17.4 percent. Looking just at petroleum, import prices did rise 1.0 percent on the month but were down 28.6 percent on the year.

Export details include a 1.5 percent monthly drop for agricultural commodities for annual contraction of 2.3 percent. Exports of capital goods, a strength for the US economy, show a 0.2 percent monthly price rise for a 2.9 percent annual increase, which is modest but comparatively respectable.

The sharp headline decline for import prices echoes yesterday's 0.5 percent decline in producer prices and points to greater disinflation ahead for consumer prices an outlook that suggests Federal Reserve hikes are at or near their end. In fact, US economic data the last several weeks have been falling well short of expectations, at minus 46 on Econoday's Consensus Divergence Index and at minus 42 when excluding prices to indicate broad underperformance.

Import prices have been edging lower month after month and are expected to fall another 0.2 percent in March. Export prices are also expected to fall 0.2 percent versus the prior month's 0.2 percent increase.

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, which exclude tariffs and taxes, measure underlying 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.