Little Import and Export Price Inflation in July 2014

August 14th, 2014
in aa syndication, prices - ppi, cpi, etc

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Year-over-year  import price inflation marginally declined, 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 imports down 0.2% month-over-month, up 0.8% year-over-year;
  • and exports unchanged month-over-month, up 0.4% year-over-year..
  • the markets were expecting:
  Consensus Range Consensus Actual
Export Prices - M/M change -0.6 % to 0.2 %  -0.1 %  0.0%
Import Prices - M/M change -0.6 % to 0.0 %  -0.2 %  -0.2%

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: Overall import prices fell 0.2 percent in July, the first monthly decline for the index since a 0.6-percent drop in April. Import prices ticked up 0.1 percent in June and rose 0.3 percent in May. The price index for overall imports advanced 0.8 percent over the past 12 months, a similar movement to the 0.9- percent increase from July 2012 to July 2013. Both higher fuel and nonfuel prices contributed to the most recent year-over-year increase, in contrast to the rise for the year ended in July 2013 which was driven solely by higher fuel prices.

All Exports: Prices for overall exports recorded no change in July following a 0.4-percent decline in June. Export prices fell 1.3 percent over the past 4 months, after increasing 1.7 percent over February and March. Overall, the price index for U.S. exports rose 0.4 percent over the past 12 months. Rising nonagricultural prices between July 2013 and July 2014 more than offset a drop in agricultural prices.

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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