Why US Import, Export Prices Jumped Two Months In A Row

The price index for U.S. imports as well as exports rose 1.4% during June, the Bureau of Labor and Statistics said Tuesday. This marks two consecutive months of price index increases.

What Happened: Export price increases can be heavily attributed to higher fuel prices.

When June CPI numbers were released, fuel prices saw modest increases.

The price index for import fuel in June advanced an eye-watering 21.9% after a 15.4% increase in May. June saw the largest advance rise since the index was first published monthly in September 1992.

Outside of fuel, nonfuel import prices rose 0.3% in June after a small 0.1% advance during May.

The price index for U.S. exports rose 1.4% in June, the largest advance for the index since a 1.5% increase in March 2011.

Why It’s Important: The increase at first seems to signal that the economy is returning to life. Yet it's important to look at historical data. 

Even factoring in June’s massive fuel import advance, import fuel prices have fallen 36.4% over the last year.

Likewise, exports, despite their June rise, decreased 4.4% year-over-year from June 2019 to June 2020. Specifically, agriculture exports have seen a 4.5% decrease in the past year.

Prices are starting to reflect more current events and balance a new reality. 

For some companies, import and export orders are placed months in advance, so supply and demand changes may just now be reflected in pricing. 

What’s Next: Keep looking for market price correction. With a lot of uncertainty surrounding massive trade partners such as China, expect some modest shifts in the coming months.

July import and export price index data will be releasedat 8:30 a.m. on Thursday, Aug. 13.