Import and export prices had been cooling noticeably until that is today's report. Both headline monthly gains, at 0.4 and 0.7 percent respectively, are above Econoday's consensus forecasts. Annual rates, which fell into contraction earlier this year, are now floating back up toward the surface, at minus 4.4 percent for imports, up from minus 6.1 percent in June and the first rise since December last year, and at minus 7.9 percent for exports and the first rise since May last year.

OPEC+ production cuts are having their effect as prices of imported fuels jumped 3.6 percent on the month in July on top of June's 1.9 percent rise. Excluding fuels, import prices were unchanged with this annual reading at minus 0.9 percent. But higher agricultural prices are also at play, as imported foods, feeds and beverages jumped 2.5 percent in the month reflecting higher prices for fruit, vegetables and meat. Another factor is higher vehicle prices with these imports up 0.3 percent in the month which is high for this reading and reflecting price pressures for passenger cars and also heavy vehicles.

The monthly jump in export prices is the highest since June last year with agricultural prices up 0.9 percent on pressures for soybeans, meat and wheat. Nevertheless agricultural prices on the year, in bad news for US farmers, are down 5.8 percent. Nonagricultural prices jumped 1.5 percent on the month in July reflecting a 6.7 percent jump in export fuel prices.

This report leaves Econoday's Consensus Divergence Index at minus 6, close enough to the zero line to indicate that US data in sum are coming within Econoday's consensus ranges. Yet when excluding higher-than-expected inflation readings like today's report and Friday's producer price data, the index falls to minus 18 which is perhaps a warning that recent US data on net and despite this morning's retail sales repor are beginning to underperform.

Import prices fell 0.2 percent in June with July's expectations calling for a 0.2 percent rebound. Export prices, which in June dropped 0.9 percent, are expected to edge 0.1 percent higher. This report has consistently pointed to substantial cooling in cross-border price pressures.

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.