Import Prices More Moderate Than Expected

Import price inflation was more moderate than expected in September, at +0.1% M/M (vs 0.5% expected, 0.6% prior rev.) and ex-petroleum -0.3% M/M (-0.1% expected, -0.1% prior rev.). Export price growth was a little stronger than expected on the month (+0.7% M/M vs 0.5% expected) but that was offset by a 0.2pp downward revision to Aug (to +1.1%).

• On an annual basis, import prices fell 1.7% Y/Y, from -2.9% prior; export prices dropped -4.1% vs -5.7% prior.
• Coming on the heels of September's above-expected core inflation data, import price developments continue to suggest downward pressure on goods prices at the margins.
• US dollar strength has historically translated into softer import prices with a lag, and that's been the case on an annual basis for the past 8 months (all negative import prices Y/Y). That may continue for some months yet, but with the dollar turning negative Y/Y in mid-2023, the disinflationary headwind may abate.
• Prices in the current cycle have also been buffeted by supply chain issues, though those have largely abated too, again offering less of a disinflationary impulse beyond the immediate term.
• All that said, with September's CPI and PPI reports already in hand, the import price report brought little market reaction.