The Fed is struggling like mad to produce inflation, with little success on some fronts. Of course the Fed ignores asset bubbles in its measures.

Import/Export Prices

The Bloomberg Consensus range for export prices was 0.1%. The range for import prices was 0.4%.

Economists were wildly off the mark on both estimates. Both prices declined. Export prices declined more than any economist’s guess.

Here are some Import/Export charts from the BLS.

Import Prices M/M and Y/Y

Thanks to a strong dollar, import prices declined for ten consecutive months. Year-over-year, import prices are down nine consecutive months.

Export Prices M/M and Y/Y

Export prices are down eight of the last nine months. Year-over-year, export prices are down eight consecutive months.

Effect on GDP

Imports subtract from GDP and exports add to GDP. Import prices down and export prices up is a good thing from that perspective.

Fuel Imports

The price index for import fuel increased 0.7 percent in April, after rising 1.2 percent the previous month. The March advance was the first monthly increase in fuel prices since the index rose 1.6 percent in June 2014. In April, a 1.0-percent advance in petroleum prices more than offset a 7.0-percent drop in natural gas prices. Despite the recent increases, fuel prices declined 46.1 percent for the year ended in April. Both a 47.0-percent decrease in petroleum prices and a 45.2-percent drop in natural gas prices contributed to the overall year-over-year decline in fuel prices.

Agricultural Exports

Agricultural export prices decreased 0.8 percent in April, after falling 1.7 percent in March. The April drop was driven by a 2.4-percent decline in meat prices, a 1.7-percent decrease in soybean prices, and a 2.7-percent fall in fruit prices. The price index for agricultural exports has not recorded a monthly advance since the index ticked up 0.1 percent in November 2014. The index decreased 15.6 percent for the year ended in April, the largest 12-month decline since the index fell 16.7 percent between September 2008 and September 2009.

The price index for nonagricultural exports declined 0.7 percent in April following advances of 0.2-percent and 0.1-percent the previous 2 months. The April decline was led by declining prices for nonagricultural industrial supplies and materials, capital goods, and consumer goods. In contrast, prices for automotive vehicles ticked up 0.1 percent in April. Nonagricultural export prices decreased 5.3 percent over the past 12 months.

Producer Prices

The Bloomberg Consensus Estimate for producer prices was 0.2%. Once again economists were wildly off the mark. The Producer Price Index came in at -0.4%, outside the range of any economist’s prediction.

PPI for Finished Goods Percent Change

Does that look recessionary?

PPI for Finished Goods Less Food and Energy Percent Change

Strip out food and energy and prices still going up.

PPI Final Demand Index

This is a relatively new series that only dates back to November of 2009.

PPI Final Demand Percent Change

Fed Hike in 2015?

The timeline for Fed hikes went from June to September to December. I did not think they would hike this year, and expectations are finally leaning that way. If the Fed does hike bond yields will spike. But when does the Fed disappoint the markets?

Mike “Mish” Shedlock