Inflation in international trade will be nothing to scare the Federal Reserve into a major inflationary panic. June’s import and export prices were more than just tame. Export prices were down by 0.4% on a month-over-month basis. Bloomberg was calling for a gain of 0.2%. Those same export prices annually were up by only 0.2%.

Import prices rose by only 0.1% on a month-over-month basis, also under the 0.4% consensus estimate from Bloomberg. The annual import prices were up only 1.2%.

The decline in import prices included a 1.7% drop for food, feeds and beverages. Coal and natural gas were lower as well. Imported petroleum prices were up by 1.4% in June, but we have already seen crude oil drop in July back to around $100 per barrel. Export prices included a 1.8% drop in agricultural prices. Almost all other categories showed declines.

As a reminder, the Federal Reserve’s inflation target is 2.0%, with an upper-end allowance of about 2.5%. Inflation has looked higher recently, but still under the Fed’s target.

Janet Yellen’s subsequent testimony in front of the Senate on Tuesday echoed that the inflation picture is one that remains tame — even if Yellen and Fed members expect inflation to eventually rise back to the Fed’s 2% target.

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