Import Prices Jump

You can read the latest import/export prices here: http://www.bls.gov/news.release/pdf/ximpim.pdf

Man, we are seeing import inflation big time. It’s bad news for consumers, and bad news for Ben Bernanke.

By the numbers, the price of imports jumped 1.8% in October, up from

1% in September, and the biggest change in over a year (since May of 2006). The year-over-year change is 9.6%. I’ll say that again, 9.6%!!!! That’s up from 5.2% in September.

Petroleum products jumped a whopping 6.9% in October, and are up 41.4% year over year. I heard one of the CNBC talking heads today saying ignore that number, focus on imports ex- oil and ex-food (food and beverage import prices are increasing at 9.8% year over year). Well, Joe Six-Pack isn’t going to ignore it – not when he’s paying $4 for a gallon of gas and his grocery bill is going through the roof. In other words, I think this import price number is going to weigh on consumer confidence.

There is some good news -- the trade gap narrowed – to $56.45 billion in September, from $56.8 billion in August. That’s the smallest trade deficit since May and it will ratchet up GDP growth.

However, the inflation in import prices is getting so hot that Ben Bernanke may not be able to ignore it much longer. And then he’ll face a conundrum if he raises interest rates to keep in inflation in check, he risks kneecapping an already stumbling housing market and sending the major stock indices down with it.

As for the export numbers, they were an improvement, but Joe Six-Pack won’t care about that, either. I look for a potential big impact on consumer confidence down the road and an even gloomier Christmas than is already being predicted.

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