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Stronger Dollar May Be Starting To Restrain US Import Inflation

DATA REACT
BulletMarketsFixed IncomeForeign Exchange

US April import prices came in a little softer than expected (0.0% vs 0.6% survey, ex-petroleum 0.4% vs 0.7% expected). This release usually gets overlooked, but today's report offers some signs that import prices are moderating, notably for ex-petroleum imports.

  • A stronger USD usually acts as a dampener to import prices, but that hasn't been the case since mid-2021.
  • That may be changing, with the 8% Y/Y rise in the broad USD exchange rate in May marking the strongest rise in 6 years.
  • Some saw weakness in apparel prices in the April CPI report for example as a potential early signal that the stronger dollar would provide a disinflationary effect.
  • Most of the worry around inflation right now is about services, but when inflation's this high, every little bit on the goods side will help.

Source: BLS, Fed, MNI

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US April import prices came in a little softer than expected (0.0% vs 0.6% survey, ex-petroleum 0.4% vs 0.7% expected). This release usually gets overlooked, but today's report offers some signs that import prices are moderating, notably for ex-petroleum imports.

  • A stronger USD usually acts as a dampener to import prices, but that hasn't been the case since mid-2021.
  • That may be changing, with the 8% Y/Y rise in the broad USD exchange rate in May marking the strongest rise in 6 years.
  • Some saw weakness in apparel prices in the April CPI report for example as a potential early signal that the stronger dollar would provide a disinflationary effect.
  • Most of the worry around inflation right now is about services, but when inflation's this high, every little bit on the goods side will help.

Source: BLS, Fed, MNI

Keep reading...Show less