July 17, 2017 – Import prices tell us the cost of products that are produced abroad and purchased in the U.S., while exports are goods produced in the U.S. but purchased abroad.
Import prices in June changed -0.2%, the same as the consensus. May’s import price change of -0.3% was revised to -0.1% (+0.2%). These past 12 months import prices increased by 1.5%, a smaller increase from the previous revised 2.3% (-0.8%). Export prices dropped by 0.2% in May, below the consensus expectations of 0.0% (-0.2%). Export year-over-year prices have risen by 0.6% from the prior revised 1.5% (-0.9%).
Import prices had another month of decline due to fuel imports -2.1% while non-fuel imports were up slightly. Exports fell for the second time; this was driven by a 1.5% decrease in agricultural prices while non-agricultural prices were unchanged. The gap between imports and exports remained the same in June but the price weakness is a worrying sign for those expecting GDP to surge in the second quarter. This lack of inflation is a risk to the Fed policy that will be addressed in the upcoming meetings.