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posted on 10 April 2015

Import and Export Price Year-over-Year Deflation Accelerates in March 2015

Written by Steven Hansen

Global trade prices are continuing to deflate year-over-year. Import prices are down 10.5% from a year ago, while export prices are down 6.7%.

Oil prices were up 0.4% month-over-month, but agricultural prices fell 1.2%.

  • with import prices down 0.3% month-over-month, down 10.5% year-over-year;
  • and export prices up 0.1% month-over-month, down 6.7% year-over-year..
  • the markets were expecting:
Consensus Range Consensus Actual
Export Prices - M/M change -0.8 % to 0.3 % -0.2 % +0.1%
Import Prices - M/M change -1.1 % to 0.5 % -0.3 % -0.3%

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 decreased 0.3 percent in March, after increasing 0.2 percent in February, the first monthly advance recorded since a 0.3-percent rise in June 2014. Prior to February, import prices decreased 10.3 percent from June 2014 to January 2015. U.S. import prices declined 10.5 percent over the past year, the largest 12-month decrease since the index fell 12.0 percent for the year ended September 2009.

All Exports: The price index for U.S. exports ticked up 0.1 percent in March, after declining 0.2 percent the previous month. The March upturn in overall export prices was driven by higher nonagricultural prices, and was the first 1-month advance since the index rose 0.1 percent in July 2014. The last time overall export prices advanced more than 0.1 percent was a 0.9 percent increase in March 2014. Despite the March 2015 advance, U.S. export prices fell 6.7 percent over the past year, the largest 12-month drop since the index declined 8.3 percent for the year ended July 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.

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