Import And Export Prices Still Weak

A swing higher for oil-related products boosted import prices to a stronger-than-expected 0.2 percent monthly rise in September, a result that will help the Federal Reserve, at least marginally, in its efforts to give a lift to inflation. Yet import prices do remain soft, evident by the year-on-year rate which did improve by 2 tenths but remains deeply negative at minus 1.6 percent. Weakness is also evident when excluding petroleum, with this reading falling 0.1 percent on the month for yearly contraction of minus 1.1 percent.

Export prices are also weak, falling an unexpected 0.2 percent on the month with this yearly rate, like on the import side, also at 1.6 percent contraction. Prices of agricultural commodities, following August's 2.3 percent drop, fell another 1.8 percent in September with this yearly rate barely in the plus column at 0.2 percent. Prices of exported finished goods are only marginally in the plus column, led by capital goods with a yearly 0.6 percent gain.

Prices of imported finished goods are tilted toward contraction, with capital goods at minus 1.2 percent year-on-year followed by autos at minus 0.7 percent and consumer goods at minus 0.4 percent. Country data, which like all data in this report exclude tariff effects, continue to show very little price variation for Chinese imports, down 0.2 percent on the month and down 1.8 percent on the year. This suggests that Chinese exporters are only marginally discounting goods shipped to the US.

Today's report offers its indirect confirmation that global cross-border trade as a whole is flat if not in contraction. Higher oil prices are not usually a plus for the total US economy but regarding inflation, and the Fed's struggle to keep it on the rise, higher oil prices may well be what policy makers would welcome right now.