Inflation Risks Loom as U.S. Import Prices Edge Higher on Fuel Costs

U.S. Import and Export Price Indexes: November 2024 Overview

Traders anticipated a -0.2% decline in monthly U.S. import prices for November 2024, but the actual increase of 0.1% exceeded expectations, driven by higher fuel costs. Meanwhile, export prices remained flat following a 1.0% rise in October. These trends highlight continued cost pressures in the international trade sector.

What Drove Import Price Movements?

The 0.1% monthly increase in U.S. import prices marks the second consecutive monthly rise, largely attributed to a 1.0% increase in fuel import prices. Notably, natural gas import prices surged 47.4% in November, following a 32.7% rise in October, representing the sharpest gains since late 2022. Despite this, natural gas prices remain 34.5% lower year-over-year. Nonfuel import prices were unchanged, with gains in food, feeds, and beverages—up 1.3% due to a 13.1% jump in vegetable prices—offset by declines in industrial supplies and capital goods.

On an annual basis, import prices rose 1.3%, marking their strongest year-over-year gain since July 2024. However, fuel imports remain 8.6% lower year-over-year, reflecting ongoing volatility in energy markets.

How Did Export Prices Perform?

Export prices were unchanged in November, as higher nonagricultural export prices balanced declines in agricultural goods. Agricultural export prices fell 0.4%, led by lower prices for soybeans and fruit, while nonagricultural exports rose 0.1%, driven by capital goods and industrial materials. Year-over-year, export prices increased 0.8%, their largest annual gain since mid-2024.

Regionally, export prices to key trading partners such as China and Japan declined in November, contributing to a weaker U.S. terms of trade. For instance, export prices to China dropped 0.5%, while those to Japan fell 1.0%.

What Does This Mean for Markets?

The unexpected rise in import prices adds to inflationary pressures, complicating the Federal Reserve’s policy outlook. Higher import costs, particularly for energy, could sustain upward pressure on Treasury yields as the Fed remains vigilant against inflation.

For commodities, the mixed price trends for fuel imports and agricultural exports suggest limited near-term support for gold as a safe haven. Equity markets may face headwinds, especially in sectors reliant on imported capital goods or consumer goods, as price increases weigh on profit margins.

In summary, the data indicates persistent cost pressures, particularly in energy markets, with a modestly bearish outlook for stocks and gold. Bond yields may see upward momentum as traders digest inflation implications for Fed policy.