Import And Export Prices Fall

Cross-border trade is slowing and cross-border inflation appears non-existent, in fact appears to be in deepening contraction. Import prices fell 0.9 percent in June for a year-on-year decline of 2.0 percent, while exports prices are falling nearly as steeply, down 0.7 percent on the month and down 1.6 percent on the year. These are all at or below the low end of Econoday's consensus ranges.

A drop in oil prices is only a superficial answer for the decline on the import side as prices excluding petroleum fell 0.4 percent. For the export side weak farm prices have been to blame but not in June as non-agricultural prices fell 1.1 percent. This broad decline offset a rare 2.7 percent monthly jump in farm prices which nevertheless are down, like overall export prices, by 1.6 percent on the year.

Turning to China, import prices edged 0.1 percent lower on the month which won't be turning up any extra heat in the trade talks. Contrasting with core consumer prices which last week showed a little heat in June (not to mention contrasting with this morning's strength in retail sales), today's report and especially the weakness in import prices does point squarely at the need to stimulate prices.