Import And Export Price Report Below Forecasts

This week's inflation data have been soft and none softer than January's import & export price report where both headlines came in well below forecasts. Import prices fell 0.5 percent in a third decline in a row that was not skewed by petroleum which edged 0.1 percent lower. Excluding petroleum, import prices dropped 0.7 percent. Year-on-year, import prices were 1.7 percent lower in January for the weakest showing in 2-1/2 years.

Export prices fell 0.6 percent which is also a third straight drop. Agricultural prices fell 2.1 percent but follow strong gains in the prior two months. Year-on-year, export prices were down 0.2 percent in January with agricultural prices up slightly but very slightly, at 0.2 percent.

Finished goods continue to show very little life though prices for capital goods exports did rise 0.4 percent in the month to lift their annual gain to 1.4 percent. This is moderate but compares well against the 1.7 percent decline for total import prices. This gain, however, is isolated as export prices for consumer goods fell a monthly 0.4 percent while import prices for consumer goods fell 0.3 percent and import prices for vehicles fell 0.2 percent.

The price weakness for finished goods has been a repeated indication in this report and a general indication that price pressures on the global level remain soft. This week's inflation data, including consumer prices on Wednesday and producer prices on Thursday, will help the Federal Reserve extend its wait-and-see monetary stance.