U.S. import prices rise in July, upside risks to imported inflation lull likely - Barclays

U.S. import prices rose in line with consensus expectations in July. The prices grew 0.1 percent sequentially. While core import prices stayed flat on the month, slightly weaker than consensus projection of a 0.1 percent monthly rise, imported petroleum rose after four straight drops. Imported petroleum rose 0.7 percent sequentially and 8.3 percent year-on-year. Meanwhile, food prices also contributed positively to the headline figure. Food prices rose 0.6 percent sequentially and 3.2 percent year-on-year, continuing their rebound from the doldrums of 2015 and early 2016.

However, outside of these measures, import price measures came in more muted. Industrial supplies dropped for the third straight month, losing some of their solid momentum at the beginning of the year. Given a 5.4 percent year-on-year pace of inflation; but, industrial supplies continue to be strong in spite of the recent monthly deceleration. Autos prices dropped for the second straight month, and consumer goods prices were widely flat on the month, in line with weak import price pressures for core consumer goods. Imported prices from Canada grew 0.6 percent sequentially, and from China they rose modestly 0.1 percent.

The latest import price report led total import prices to increase 1.5 percent year-on-year and import prices excluding fuels to decelerate to 0.7 percent year-on-year. Following the deflationary trend of 2015 and 2016, imported inflation rebounded well into early 2017; however, that has stalled in recent months, with imported inflation from industrialized and other trading partners slowing, noted Barclays in a research report.

“The recent weakening of the dollar against some of the main trading partners, however, suggests upside risks to the current imported inflation lull”, added Barclays.

At 15:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was bullish at 83.702. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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