“Disinflationary Impulse”

September 10th, 2015 8:57 am | by John Jansen |

Import and export prices are not as high profile as many other data series but they do tell a story. Millan Mulraine at TDSecurities dissects the “disinflationary impulse” in today’s data.


US import prices declined at a slightly faster 1.8% m/m pace (vs consensus expectation of -1.6% m/m) in August as the impact of the recent run-up in the dollar and fall in energy prices begins to make its way through the price channel. The decline marked the second consecutive monthly fall in the index, as import prices begin to take another leg lower. This reverses the modest drift higher during the middle of the year. Core import prices fell at a slightly more modest 0.4% m/m pace, suggesting continued dis-inflationary impulse feeding through to core prices.
The drop in the core index marked the 11th fall in this indicator in the past 12 months, providing further evidence that the dis-inflationary thrust in core consumer prices could linger for some time as these downside price pressures make their way through the inflation pipeline. On a year ago basis, core prices are down 3.0% y/y, while the pace of headline deflation accelerated to 11.4% from 10.5% y/y the month before. Coming at a time when the Fed is contemplating a liftoff in rates, the weak tone of this report should come as a key reminder to the Fed that the dis-inflationary impulse is re-emerging.
The weekly claims report was broadly in line with consensus, falling to 275K from 281K.
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