Import And Export Prices Show Unexpected Pressure

Last week's producer price report showed unexpected pressure in October as does today's report on import prices and export prices, up 0.5 percent and 0.4 percent respectively which both top Econoday's high estimates.

Petroleum prices were a major source of pressure in October, up 2.8 percent in the month in what, however, looks to reverse given this month's sharp decline in the price of oil. When excluding petroleum, import prices rose a less noticeable 0.2 percent which is soft but still relatively firm compared to the weakness of prior readings.

The export side did not benefit from agricultural prices which continue to fall, down 0.3 percent in the month for a year-on-year decline of 4.5 percent. This contrasts sharply with a 3.1 percent overall yearly increase for export prices and a 3.9 percent increase when excluding farm products. And in contrast to the export side, import prices for farm products, in what may reflect tariff effects, jumped 2.2 percent in the month.

Neither imports nor exports are getting any lift from finished goods where prices once again proved dead flat or nearly dead flat for all categories, whether capital goods, consumer goods, or autos. This has been a repeated indication that general price pressures on a global level remain soft.

Details of yesterday's consumer price report also proved more moderate than the headlines with indications from this report not pointing to much future price pressures for consumer goods. And with oil prices sliding, the risk that inflation will begin to exceed the Federal Reserve's 2 percent target doesn't look very imposing which could feed criticism of the central bank's rate-hike path.