Import prices jumped 0.8 percent in January for the strongest monthly gain since March 2022, yet this follows three straight months of prior declines and leaves the annual rate still sitting in contraction of minus 1.3 percent. Prices of imported fuel, up 1.2 percent on the month, did contribute to January's increase but pressure was nevertheless broadly based; excluding fuel, import prices rose 0.7 percent with this annual reading now only barely in the negative column at minus 0.3 percent.

Imports of foods, feeds, & beverages rose 1.5 percent in the month with this annual rate at plus 2.9 percent. Prices of finished goods, which are usually flat, showed pressure in the month: capital goods up 0.4 percent, consumer goods up 1.1 percent, and autos up 0.8 percent. The annual rate for imported autos is up 2.1 percent on the year, not much compared to other prices in the US economy but still reflecting shortages of product.

Export prices rose 0.8 percent on the month with December revised to a 0.7 percent fall (these are the same readings as the import side). On the year, export prices were down 2.4 percent versus revised 2.9 percent contraction in the prior month. Exports of industrial supplies, led by fuel and lubricants, rose 1.9 percent on the month in January with capital goods, up 0.9 percent, also showing price gains. Exports of foods, feeds, & beverages fell 1.1 percent with this category in annual contraction of 9.3 percent in sharp contrast to upward pressure for related imports.

Though the broad trend for cross-border prices is probably flat, markets may focus on the latest month's results which, in isolation, point to easing moderation and in turn less contribution to overall moderation for US inflation.

Import prices were unchanged in December with January's expectations at a 0.1 percent dip; export prices, which in December fell 0.9 percent, are expected to fall 0.2 percent. Pressures in this report have been deflationary for the past year.

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.