Analysts at Nomura suggest that while the stronger dollar has likely exerted downward pressure on US import prices, the pass-through to consumer goods prices remains subdued.
“In August, aggregate import prices declined 0.6% m-o-m, the largest decline since January 2016, driven by volatile petroleum goods prices. Excluding these products, import prices continued to fall by 0.2% m-o-m. In contrast, imported consumer goods prices remained stable. Non-auto consumer goods excluding food and energy remained unchanged in the month.”
“Overall, incoming data suggest that the pass-through of exchange rate changes to imported consumer goods prices is limited and is likely lower than the pass through to prices of industrial supplies. In addition, by locality of origin, import prices of goods from China continued to decline modestly by 0.1% m-o-m in August.”
“Given that import prices do not include import duties, lower import prices for Chinese goods indicate that exporters are may be absorbing some of the impact from higher tariffs. In light of the second round of US tariffs, which were implemented this month, September data on import prices of Chinese goods will be of interest.”
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