Import prices rebounded more than expected in April, when they rose 0.4 percent on the month, the largest gain since May 2022, topping Econoday's consensus of 0.3 percent. Import prices fell 4.8 percent from a year earlier, the same as in April. However, the previous month's negative readings were revised down, with import prices now estimated to have declined 0.8 percent on the month instead of 0.6 percent, and 4.8 percent year-over-year instead of 4.6 percent. Export prices rose 0.2 percent, as expected, for a 5.9 percent drop year-over-year. Both estimates were revised down in April, with declines of 0.6 percent on the month and 5.2 percent year-over-year.

In their first monthly advance since June 2022, import fuel prices rose 4.5 percent in April, but were still down 25.9 percent year-over-year. Nonfuel import prices remained unchanged on the month after declining 0.5 percent in March. Gains in consumer goods and foods, feeds, and beverages offset declines in nonfuel industrial supplies and materials and capital goods. Auto prices were unchanged on the month. Nonfuel prices were down 1.9 percent from a year earlier.

On the export front, both agricultural and nonagricultural prices appreciated on the month, by 0.4 percent and 0.2 percent, respectively, but fell 3.9 percent and 6.3 percent year-over-year. Prices for nonagricultural industrial supplies and materials, capital goods, and consumer goods increased, offsetting declines in autos. The 12-month decline in nonagricultural prices was the largest since May 2020.

Today's report echoes the pattern observed in both retail and producer prices earlier this week, showing inflationary pressures easing on a year-over-year basis, but intensifying month-to-month. The monthly rebound should leave the Federal Reserve on its guard against the backdrop of an economy performing only slightly below expectations as indicated by Econoday Consensus Divergence Index which is at minus 12.

Import prices are expected to rise 0.3 percent on the month in April which would end nine straight declines. Export prices are expected to rise 0.2 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, 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.