Import And Export Prices Surge

Underscoring the strength of Wednesday's core reading for the CPI, import prices surged a far stronger than expected 1.0 percent in January. And the gain isn't tied entirely to an upswing for energy as non-petroleum prices rose an unusually strong 0.5 percent. A rare 0.5 percent price jump for imported vehicles is a key detail of the report as are higher prices for imported food & beverages.

The export side shows very similar strength, up 0.8 percent overall and including even greater traction for finished goods with capital goods up 0.5 percent in the month and consumer and vehicle export prices up 0.3 percent which are outsized gains for these readings.

Year-on-year rates are back near their best readings of the expansion, at 3.6 percent for imports and 3.4 percent for exports. But it's import prices that are in special focus as expected gains here, tied to a yearlong decline in the dollar, will act to inflate the economy and after today's report are now an increasingly important factor that hawks at the FOMC will be watching with caution.

Recent History Of This Indicator:
Import prices have shown pressure in recent months but not when excluding petroleum where readings have been flat. December's results were weak throughout including for export prices. Tangible improvement is the call for January where the consensus for import prices is a gain of 0.6 percent and 0.3 percent for export prices.