📊 U.S. Import and Export Price Indexes

To: Institutional Clients

From: Global Economics Strategy Team

Date: September 2026

Subject: US Import/Export Price Indices – Assessing Imported Inflationary Pressure

1. Executive Summary

The latest Import and Export Price Index data reveals a regime of sustained price elevation, with both indices trading at the extreme upper bounds of their 10-year historical ranges. The Import Price Index (IR) has reached its 100th percentile (150.80), signaling a peak in the cost of foreign goods entering the US. While there was a brief period of volatility in mid-2026, the August print confirms a return to peak levels, suggesting that external cost pressures remain entrenched.

From a policy perspective, this data complicates the Fed's path toward a neutral rate. The persistence of high import prices acts as a primary conduit for "imported inflation," potentially offsetting domestic efforts to cool the CPI. The tight correlation between the IR and Export Price Index (IQ) suggests a broad-based upward shift in global price levels rather than a currency-driven anomaly.

2. Five Main Views

• Import Price Peak: The Import Price Index has hit its 10-year ceiling (150.80), placing the current regime at the 100th percentile of historical observations.
• Aggressive Q2 Acceleration: A sharp acceleration occurred between February 2026 (143.5) and May 2026 (150.7), representing a ~5% surge in just three months.
• Export Pricing Power: Export prices remain elevated at the 96.6th percentile (166.2), indicating that US producers have successfully passed higher input costs onto foreign buyers.
• Resilient Price Floors: Despite a slight dip in June/July, the August rebound to 150.8 (IR) and 166.2 (IQ) suggests a high structural floor for prices.
• Imported Inflation Risk: With a Z-score of +1.88σ for imports, the risk of cost-push inflation leaking into the domestic PCE index is significantly heightened.

3. Macro Characterization

(i) Growth: The ability of the Export Price Index to maintain levels near its 10-year high (Z-score +1.82σ) suggests strong global demand for US goods, implying that external growth remains robust enough to absorb higher price points.

(ii) Labor Market: While these indices are price-centric, the sustained upward pressure on import costs typically forces firms to either compress margins or raise domestic prices; if the latter occurs, it may sustain nominal wage demands as workers seek to keep pace with rising costs of living.

(iii) Inflation: The data describes a high-inflation regime. The Import Price Index rose from 141.0 in August 2025 to 150.8 in August 2026, a year-on-year increase of 6.95%. This trajectory indicates that the "disinflationary" trend is not being supported by trade data.

4. Cyclical Alignment

Based on the 10-year Z-scores (+1.88σ for IR and +1.82σ for IQ), the current regime is classified as late-cycle overheating. While the Z-scores have not yet breached the |2.0| threshold for a definitive "regime shift," the fact that the Import Price Index is at the 100th percentile indicates the economy is operating at the absolute limit of its historical price ceiling. This is characteristic of a late-cycle peak where input costs maximize before a contractionary phase.

5. Policy Outlook

The data suggests a hawkish hold for the Federal Reserve. With import prices hitting a 10-year high and YoY growth at nearly 7%, the Fed cannot risk premature easing. Any rate cut in the current environment would likely weaken the USD, further inflating the Import Price Index and accelerating the pass-through to domestic consumers.

Forecast: We expect the Fed to maintain current rates for at least the next two meetings. A pivot to cuts will only be viable if we see a sustained break below the 145.0 level for the Import Price Index, signaling a cooling of external inflationary pressures. Balance of risks remains tilted toward the upside.