Import prices/It's the cumulative rise in inflation, stupid

After jumping in April, import prices fell in May, leaving the y/o/y change not much changed. The headline fall was .4% vs the April rise of .9%. The estimate was for a one tenth drop. Ex petro saw a 3 tenths fall after rising by 6 tenths last month. The estimate was for another .2% rise. Versus last year, headline import prices are up 1.1% mostly because of a 9.8% rise in petro prices and 5.6% gain in food/beverages. Offsetting this are more muted gains in consumer goods which are unchanged y/o/y, capital goods prices lower by .2%, industrial supplies up by 2% and auto/parts import prices higher by 2.3% y/o/y.

Bottom line, overall still pretty benign on the import price data for goods, which squares with the CPI goods data which is flattish too y/o/y, which happens to be the pre Covid trend. Question now is whether it’s sustainable and stays at current trends. We hope so but I question it.

As for the influence of the dollar on import prices, the trade weighted dollar index from the Fed is only slightly above the 2 yr average and with some of this gain coming just over the past few weeks as the Mexican peso fell sharply after their election. https://www.federalreserve.gov/releases/h10/current/