The U.S. April trade price report undershot estimates
The U.S. April trade price report undershot estimates with lean 0.2% gains for both import and export prices. Analysts saw the largely expected 6.1% petroleum import price rise, but a surprisingly weak -0.6% figure for import prices ex-petroleum translated to a 0.3% "core" price drop. Export prices were hit by a 1.5% decline in agricultural export prices, alongside the largely expected 0.4% ex-agriculture gain that left a 0.1% "core" price rise. The renewed trade war will prompt a resumption of downward trade price pressure going forward, just as analysts saw over the intervals last year when the conflict was escalating. Though tariffs raise prices for consumers, the trade price measures are "pre-tax," so they capture the drop in pre-tax prices as producers absorb part of the hit. Beyond the trade war, the trade price indexes rebounded in Q1 after a big winter drop, as analysts partly reversed the late-2018 headwinds from falling oil prices and reduced global growth estimates. Other U.S. inflation metrics posted a similar headline Q1 rebound, though with "core" price weakness that the Fed sees as "transitory." Analysts expect trade price declines in May, of -0.3% for imports and -0.2% for exports.