Import And Export Prices Rise

Cross-border price pressures continue to show some life. The July headline for import prices is up only 0.1 percent but when excluding petroleum, where prices fell back sharply following a series of double-digit monthly gains, prices rose 0.5 percent. The 0.5 percent gain doesn't look staggering but it is the sharpest gain in more than five years, since April 2011.

Pressure on the import side is centered in food prices which jumped 3.3 percent in the month with the year-on-year rate for food moving back into the plus column to 1.4 percent. Non-petroleum industrial supplies also show pressure, up 2.1 percent in the month. Petroleum prices fell 3.6 percent with a drop in crude offsetting a big swing higher for natural gas.

Turning to the export side of the report, export prices rose 0.2 percent but here too the core reading, which for exports excludes both food and energy, shows a bit more pressure at plus 0.3 percent. Year-on-year, export prices improved slightly but still remain negative at minus 3.0 percent with import prices also showing improvement but also negative at minus 3.7 percent.

Global demand is holding steady and is perhaps firming slightly based on today's price report. Watch for producer prices on tomorrow's calendar and on next week's calendar the key consumer price report where several months of pipeline price pressure have yet to appear.

Recent History Of This Indicator:
Import prices are expected to fall back in July as petroleum prices eased, down a consensus 0.4 percent. Outside of petroleum, import prices have shown only isolated pressure this year and no pressure yet on finished goods prices.