Imported inflation unexpectedly accelerated in April, when the import price index rose 0.9 percent on the month, the largest gain since March 2022, topping even the highest forecast of 0.4 percent in an Econoday survey. Reinforcing the picture was an upward revision to March's estimate to 0.6 percent from 0.4 percent. Prices were up 1.1 percent year-over-year, picking up from 0.4 percent in March, posting their largest increase since December 2022.

Fuel import prices were up 2.4 percent on the month after advancing 5.4 percent in March and nonfuel prices were up 0.7 percent.

Following Wednesday's CPI report that showed core consumer prices were still up 3.6 percent year-over-year despite the slowdown from 3.8 percent in March, today's data confirm the last mile remains a challenge for the Federal Reserve. At minus 13, Econoday's Relative Performance Index is pointing to limited easing risk.

Export prices also unexpectedly accelerated on the month, rising 0.5 percent after 0.1 percent in March, which was revised down from 0.3 percent. Econoday's consensus was 0.2 percent. Export prices contracted 1.0 percent year-over-year in April, after declining 1.6 percent in March, the smallest decrease since February 2023.

Agricultural export prices were down a further 0.9 percent in April, while non-agricultural export prices were up 0.7 percent after advancing 0.3 percent in the previous month.

Import prices in April are expected to increase 0.2 percent versus an increase of 0.4 percent in March. Export prices, which in March rose 0.3 percent, are also expected to rise 0.2 percent. Pressures in this report had been deflationary since firming early in the 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.