U.S. import prices rise below expectations in April

U.S. import prices rise below expectations in April. On a sequential basis, import prices grew 0.3 percent, as compared with consensus expectations of 0.5 percent rise. However, nonpetroleum import prices came in line with expectation, rising 0.1 percent sequentially. The message from import prices is one of divergence between energy and consumer import prices. Petrol and petroleum products rose 1.6 percent sequentially and 20.6 percent year-on-year, showing the stable rise in oil prices since the middle of 2016.

The potential for increasing tensions in the Middle East after the decision by the U.S. to pull out of the Iran nuclear agreement might keep this trend in place in the near term, though any rise is seen as ultimately short-lived due to the response of U.S. tight oil production.

Elsewhere, rises in nonpetroleum import prices continue to stay modest. The lone point of strength continues to be industrial supplies and materials, which rose 1 percent sequentially and 12.2 percent year-on-year. But capital goods import prices remained flat on the month and consumer goods rose just 0.1 percent. Automotive import prices also rose just 0.1 percent. The strengthening in auto prices after the sharp rise in demand for autos at the end of 2017 continues to wane.

Overall, the rate of import price inflation continues to be stable and fairly modest in spite of increasing energy prices: total import prices rose 3.3 percent in April, similar to the pace seen over the last half year, and import prices excluding petroleum rose 1.7 percent, down modestly from March.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was bearish at -89.5965. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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