Import and Export Price Inflation Moderates in August 2014

September 12th, 2014
in aa syndication, prices - ppi, cpi, etc

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Year-over-year  import price deflated this month, whilst export price growth remains in a very tight and insignificant inflation range. Both oil price indices and food declined this month.


Follow up:

  • with import prices down 0.9% month-over-month, down 0.4% year-over-year;
  • and export prices down -0.5% month-over-month, up 0.4% year-over-year..
  • the markets were expecting:
  Consensus Range Consensus Actual
Export Prices - M/M change -0.8 % to 0.2 %  -0.1 %  -0.5%
Import Prices - M/M change -1.5 % to 0.0 %  -1.0 %  -0.9%

There is only marginal correlation between economic activity, recessions and export / import prices. Prices can be rising or falling going into a recession or entering a period of expansion. Econintersect follows this data series to adjust economic activity for the effects of inflation where there are clear relationships.

Econintersect follows this series to adjust data for inflation.

Year-over-Year Change – Import Prices (blue line) and Export Prices (red line)

There are three cases of deflation outside of a recession – early 1990′s, late 1990′s, and mid 2000′s. Import price deflation is normally associated with strengthening of the dollar relative to other currencies.

According to the press release:

All Imports: Prices for overall imports declined 0.9 percent in August, the largest monthly drop in import prices since a 0.9-percent decrease in November 2013; those were the largest declines since a 2.3-percent drop in June 2012. The August 2014 decrease resulted from lower fuel prices which more than offset a 0.1- percent increase in nonfuel prices. The price index for overall imports fell 0.4 percent for the year ended in August, the first 12-month decline since a 0.4-percent decrease in April.

All Exports: Export prices declined 0.5 percent in August following a 0.1-percent uptick in July and a 0.5- percent drop in June. In August, both agricultural and nonagricultural prices contributed to the decrease. Despite declines in August and June, export prices advanced 0.4 percent over the past 12 months as rising nonagricultural prices more than offset lower prices for agricultural exports.

How moderate the price increases have been over the past year is obvious from the graphic below.

Month-over-Month Change – Import Prices (blue line) and Export Prices (red line)

The biggest mover of import and export prices are oil (imports) and agricultural products (exports).

Oil Import Price Change Month-over-Month (blue line) and Agriculture Export Change Month-over-Month (red line)

Export / Import prices are the first inflation numbers reported each month.

Caveats on the Use of the Export / Import Price Index

Both import and export prices index values shown in this post is a weighted average for the the entire category of exports or imports. The BLS has many sub-categories relating to a particular commodity or goods. Econintersect using spot checks believes these subindexes are accurate.

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