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Econ Wrap-Up: Import & Export Prices

4/13/2015
By Jennifer Coombs

It’s quite clear that the doves in the Federal Reserve can be a bit more persuasive after today’s import-export price report notes that there aren’t any signs of inflationary pressures. For the month of March, import prices declined by 0.3% with the key reading excluding petroleum-related prices down by 0.4%. On a year-over-year basis, import prices have declined for the eighth month in a row at a huge -10.5% overall and -2.7% excluding petroleum. We note that these year-over-year declines are the steepest declines since late 2009. The stronger US dollar is not only pulling down foreign demand for US exports, but also pulling down the prices of foreign imports. However, this is not an issue on the export side where deflationary forces are also apparent. In March, export prices edged about 0.1% higher for the month, but are down 6.7% year-over-year for the seventh straight monthly decline. Looking at the prices of finished goods, there are declines among all imported products, with motor vehicle imports showing the greatest contraction, at -0.3% for March and -1.8%, year over year. The Fed’s two policy targets, inflation and employment, are both clearly soft after March’s jobs report and today’s import-export data.  So far, the Fed’s rate hike timing is not impacted by this report, but next week’s readings for the producer price index (PPI) and consumer price index (CPI) might be enough to get the hawks to reconsider.

Jennifer Coombs
Wall Street Strategies

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