Though lower fuel prices helped pull import prices down a steep 0.8 percent on the month in October, price weakness is evident beyond fuel excluding which import prices fell 0.2 percent. Export prices, pulled lower by agricultural products specifically soybeans, fell 1.1 percent compared to September. Both import and export prices extended their long run of annual contraction, at minus 2.0 percent for imports and minus 4.9 percent for export. Annual contraction for these readings began to appear early in the year.

Prices of fuel imports fell 6.3 percent on the month in October, sharp enough to pull annual contraction to minus 11.2 percent. Annual contraction for nonfuel imports is minus 0.9 percent. Import details include monthly declines for agricultural products, building materials, and metals.

On the export side, agricultural products declined 1.1 percent (the same as the export headline) with annual contraction here at minus 8.5 percent. Excluding agriculture, export prices fell 1.0 percent on the month and were down 4.5 percent on the year.

Prices for finished goods show little change though prices for imported vehicles did rise 0.3 percent on the month which is sizable for this reading. Yet annual price growth for imported vehicles is only 1.6 percent.

The extending decline for import prices is a key plus for policymakers and lowers the need for a a resumption of rate hikes. These results are lower than expected and help pull the Relative Performance Index to minus 19 to indicate that recent data on net are coming in below expectations. Yet when excluding the recent run of soft inflation data, like import and export prices, the index comes in at plus 1 to indicate that the real economy is performing as expected.

Import prices edged 0.1 percent higher in September with October's expectations at a 0.3 percent fall. Export prices, which in September rose 0.7 percent, are expected to fall 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.