Export prices turned out even hotter: +2.2% for the month against a forecast of +1.0%. August data was also revised: imports - from +0.7% to +0.5%, exports - from +0.6% to +1.2%.
An important detail: the import price index is calculated without duties and fees. That is, it's a clean check of who pays for the tariffs - foreign suppliers or the American buyer. So far it looks like the latter: in August, prices for imports from China rose by 1.0% for the month, the strongest monthly gain since the series began in January 2004. Fuel imports rose by 26.8% year-over-year, natural gas - by 102.6%.
This is the third hot report in a week. Consumer inflation (CPI) accelerated to 3.7% year-over-year against a forecast of 3.6%, core - 2.6% versus expectations of 2.5%. Gasoline added 9.1% for the month and accounted for more than half of the entire gain. The producer price index (PPI) came in worse than all: +1.3% for the month and 6.3% for the year against a consensus of 0.5% and 5.3% - the fastest since March 2022.
Import prices on their own rarely move the market, but they feed into future consumer prices and GDP calculations. The market is still proceeding from the assumption that the Fed has time and the issue will be resolved by December. The next meeting is October 27-28.
Three reports in a week - and all missed the forecast
When data comes out worse than consensus one after another, the sharpest candles happen in that half hour that many simply sit out away from the market. If you're working during those minutes, first check the rules: some prop programs explicitly prohibit trading a few minutes before and after a release, and a violation closes the account without discussion. Some also restrict leverage during the release of statistics. It's easier to rule out such programs in advance than to find out about the clause after the report.