The BLS's Import/Export price release, from May 13th, might seem like old news. And some aspects are. But I think it is useful to think about what the trends in these price indices mean for general inflation and the adjustment process (this is in some sense an update on this post).
First, consider import prices.
Figure 1: Log dollar exchange rate (up is weaker) against broad basket of currencies (blue), log goods import price (red), log goods import ex-oil price (green), all normalized to 2002M02=0. Source: Federal Reserve Board via St. Louis Fed FREDII, BLS Export/Import price release (May 13), and author's calculations.
Note that while total goods import prices (including commodities such as oil) have surged nearly 40% since 2002M02 -- a remarkable 9/10 of the 45% depreciation of the broad trade weighted dollar over the corresponding period -- the non-oil goods import price has only moved by a third of the dollar's change. (This is why measured United States exchange rate pass-through is higher for prices including dollar-denominated commodities (1), (2)).
What does this mean? In particular, will these import price changes feed into a generalized change in the CPI? In a mechanical sense, they must since imported goods comprise some portion of the CPI. However, in an economic sense, they might not, to the extent that non-import prices fall.
Note that export prices have also risen. Figure 2 depicts the corresponding picture. Both the goods export and goods export ex-agriculture price indices have risen, accounting for between 4/5 and a half of the dollar's depreciation. And while it is typical to focus on import prices as the key driver of domestic inflation, it is important to understand that as long as goods used in domestic consumption and exportables are to some degree substitutable, then rising export prices can also exert upward pressure on inflation.