U.S. May Be Importing Chinese Inflation

U.S. import prices suggest Chinese inflation may be spilling over, says Aichi Amemiya of Nomura. U.S. import prices rose 2.7% m-o-m in March, higher than the market consensus of a 2.1% increase. The hike came on the back of higher crude-oil products, while higher food and drink prices lifted the non-fuel import prices.

Amemiya notes the price of Chinese imports rose 2.6% year-over-year in March, up from 1.9% in the previous month, the highest since December 2008. “Given imports from mainland China accounted for almost 20% of total US goods imports, the acceleration in inflation of Chinese products will likely feed into domestic prices to some extent. Some retailers showed serious concerns about imported inflation. We think that higher imported inflationary pressure from China is a reflection of higher labor cost and the weakening US dollar,” Amemiya says.

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