A plain-English guide to import prices and dollar pass-through: why the exchange rate explains less than you think.
Written Tuesday October 20, using the September 2026 import price report as the live example: imports up 1.1 percent and 8.1 percent on the year, fuel up 4.8 percent, nonfuel up 6.0 percent on the year while the Fed's broad dollar index fell 0.7 percent (BLS, FRED). What the BLS index measures (dollar prices, before duties), what exchange-rate pass-through is, why dollar invoicing keeps it low in the US, why DXY is the wrong dollar for the job, and how to read the next report.
Written Tuesday October 20, using the September 2026 import price report as the live example. On Friday October 16 the Bureau of Labor Statistics reported that US import prices rose 1.1 percent in September and 8.1 percent over the year (Friday's analysis note has the market side). The usual first question about import prices is "what did the dollar do?" This guide explains what the index measures, what exchange-rate pass-through is, why it is weaker in the US than in most countries, and why September's numbers had little to do with the dollar.
What the index measures
The BLS U.S. Import and Export Price Indexes track the prices of goods bought from, and sold to, the rest of the world. Prices come from a survey of the firms doing the trading, for a representative basket of traded goods (BLS Handbook of Methods, International Price Program). The report is published monthly at 8:30 AM ET, usually after that month's CPI and PPI. The September 2026 edition followed CPI on October 14 and PPI on October 15.
Three features matter for reading it:
- It is in dollars. A German machine priced in euros is converted to dollars at the time of the transaction, so a weaker dollar can raise the index even if the German price did not change.
- It excludes import duties. Most prices are quoted at the foreign port, before duties, so the index measures what the foreign seller receives, not what the US buyer pays after tariffs (see BLS, "How tariffs relate to BLS import and export price indexes"). A tariff appears in the index only if the foreign seller cuts its price to absorb part of it.
- Fuel and nonfuel behave differently. Fuel imports are mostly crude and products priced in dollars on world markets, so they follow oil, not the exchange rate. The nonfuel index is where currency effects, if any, show up.
What pass-through means
Exchange-rate pass-through is the share of a currency move that shows up in import prices. If the dollar falls 10 percent and the dollar price of imports rises 10 percent, pass-through is complete. If import prices rise 3 percent, pass-through is 30 percent. Then there is a second stage, from import prices to consumer prices, which is smaller again, because imports are only part of what consumers pay for (retail margins, transport and domestic labour make up the rest).
Why pass-through is low in the US
The main reason is invoicing. Most goods sold to the US are priced in dollars, not in the exporter's currency. When a good's price is set in dollars, a currency move changes the foreign seller's margin first, and the dollar price changes only when the seller resets it. Research using the BLS's own price microdata (Gopinath, Itskhoki and Rigobon, "Currency Choice and Exchange Rate Pass-Through," American Economic Review, 2010) found that pass-through is much higher for the minority of US imports priced in foreign currency than for those priced in dollars.
The practical consequence: in the US, a dollar move of a few percent is a weak explanation for an import-price move of a few percent. In a country whose imports are priced in dollars, the reverse is true; a weaker local currency feeds through quickly.
Use the right dollar
DXY is the dollar index most traders quote, but it holds six currencies and the euro is 57.6 percent of it (source: ICE U.S. Dollar Index FAQ). China, Mexico and Canada, three of the largest sources of US imports, are either absent or small in it. For pass-through, the better measure is the Federal Reserve's broad trade-weighted dollar index (FRED DTWEXBGS), which weights currencies by trade.
The two can tell different stories. From the end of September 2025 to the end of September 2026, DXY rose about 3.8 percent, from 97.77 to 101.45 (Yahoo Finance, DX-Y.NYB monthly closes). Over the same months the broad index's monthly average fell about 0.7 percent, from 120.03 to 119.22 (FRED DTWEXBGS). On DXY the dollar strengthened. Against the currencies the US actually buys from, it was roughly flat.
The September report, read this way
| Index | September m/m | 12 months |
|---|---|---|
| All imports | +1.1% | +8.1% |
| Fuel imports | +4.8% | +34.5% |
| Nonfuel imports | +0.7% | +6.0% |
| All exports | +2.2% | +11.6% |
| Broad dollar (Fed, monthly average) | -0.7% |
Sources: BLS U.S. Import and Export Price Indexes, September 2026 (fuel 12-month change as reported by BLS); FRED DTWEXBGS.
- Fuel did most of the month. A 4.8 percent rise in fuel import prices follows oil; Brent's daily closes averaged about $102 in September, in a range of $94.65 to $108.75 (Yahoo BZ=F).
- Nonfuel rose 6.0 percent over a year in which the broad dollar barely moved. Whatever pushed up the prices of imported goods other than fuel, it was not the exchange rate. Energy used to make those goods abroad and freight are candidates; the index alone cannot say which.
- The level is high. The all-imports index, at 152.2 in September, is above its June 2022 level of 148.5 (BLS series EIUIR). The nonfuel index, at 137.6, is above its June 2022 level of 129.2 (EIUIREXFUELS).
- Export prices rose faster. Exports up 11.6 percent against imports up 8.1 percent means the US's terms of trade improved: each unit of exports buys more imports. With agricultural export prices up 2.6 percent and nonagricultural 2.1 percent in September (BLS), the gain was broad, not only energy.
Why markets rarely move on it
By the time import prices arrive, CPI and PPI for the same month are already out, and CPI already contains whatever import costs reached consumers that month. The report adds detail, not much news. On October 16 the 10-year yield moved 0.8 basis points in the half hour after release (Yahoo ^TNX 30-minute bars), and the October 16 plan set a deliberately wide no-call band for that reason. The report matters more over months than on the day: a sustained rise in nonfuel import prices is a pipeline pressure on core goods inflation.
A checklist for the next report
- Split fuel from nonfuel before saying anything about the dollar.
- Compare nonfuel import prices with the broad trade-weighted dollar, not DXY, over 6 to 12 months, not one month.
- Remember duties are excluded; a tariff shows up in CPI before, or instead of, here.
- Look at export prices too: the gap between the two is the terms of trade.
- Check the revision to the prior month. August 2026 was revised from 0.7 to 0.5 percent (BLS, as reported by investingLive).
Where this shows up in practice
- October 16 (Friday): import prices up 1.1 percent, stocks down 1.1 percent, no haven bid (the live example)
- October 15 (Thursday): PPI up 1.3 percent, the 10-year down 10 basis points
- October 14 (Wednesday): core CPI hot at 0.3 percent
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