Retail sales last month slipped a bit, the Census Bureau reports. But much of the decline came from the auto and related industries. Given the soft economic backdrop of late, it’s no wonder that consumers are reluctant to buy cars, which for most folks are the largest purchase after a house. Otherwise, this was a surprisingly good report, given the dominance of plus signs elsewhere in the column of monthly changes among the broad categories of retail sales. Excluding motor vehicles and parts, retail sales overall rose 0.5% last month.
Joe Sixpack seems to be holding up quite nicely in the face of recessionary fear, or so this data series is telling us. So, what’s the problem? For some thoughts on that, we turn to import prices, which surged by 1.8% last month, the Bureau of Labor Statistics reports. Sure, that’s lower than the nosebleed 2.9% for March. But no one should be celebrating. The United States is importing inflation, and the problem may get worse.

On a rolling 12-month basis, import prices are rising by 15.4% through April, which is the highest since at least 1990 (the monthly data doesn’t extend further back). The point here is that the prices of imports are skyrocketing. The weak dollar is a key reason. As the buck sinks in value relative to foreign currencies, the result is higher prices for Americans. The hope is that the dollar will stabilize or (gasp!) rise a bit. But for the moment, that’s just a hope. There’s been some recovery in the U.S. Dollar Index this month, although it’s not yet clear if that represents a sustainable reversal or just noise.
Meanwhile, it’s true that a fair share of the bubbling in import prices can be blamed on petroleum prices. But even after excluding oil and gasoline from the mix, import prices are still rising by a lofty 6.2% on an annual basis, as of last month, as our chart below shows, which is well above the 4.0% annual pace of consumer prices, as of March.

If this keeps up, Joe Sixpack will be more than just pinched—he’ll be run over with a bus, or two. Indeed, imports overall are significant slice of the U.S. economy. Last year, U.S. imports totaled $2.3 trillion, or about 16% of GDP.
Imports as an economic enterprise are too big to ignore. The same goes for import prices. The only question: When will the consumer start paying more attention?