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posted on 12 March 2015

Import and Export Price Year-over-Year Deflation Accelerates in February 2015 Even With Increase in Fuel Prices.

Written by Steven Hansen

Global trade prices are continuing to deflate. Import prices are down 9.4% from a year ago, while export prices are down 5.9% from a year ago. Of course oil prices were up 6.5% this month, but agricultural prices fell 2%.

  • with import prices up 0.4% month-over-month, down 9.4% year-over-year;
  • and export prices down 0.1% month-over-month, down 5.9% year-over-year..
  • the markets were expecting:
Consensus Range Consensus Actual
Export Prices - M/M change -0.8 % to 0.5 % -0.1% -0.1%
Import Prices - M/M change -1.0 % to 0.9 % +0.2% +0.4%

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: Import prices advanced 0.4 percent in February, the first monthly rise since a 0.3-percent increase in June 2014, and the largest 1-month advance since the index rose 0.5 percent in March 2014. In February, an upturn in fuel prices more than offset declining nonfuel prices. Despite the February increase, import prices fell 9.4 percent over the past 12 months, the largest year-over-year decrease since the index fell 12.0 percent between September 2008 and September 2009.

All Exports: U.S. export prices edged down 0.1 percent in February, led by lower agricultural prices which more than offset rising nonagricultural prices. The price index for overall exports has not recorded a monthly advance since the index increased 0.1 percent in July 2014. Overall export prices also fell for the year ended in February, declining 5.9 percent, the largest 12-month drop since the index decreased 6.2 percent in August 2009.

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.

Related Posts:

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