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posted on 13 May 2015

Import and Export Price Year-over-Year Deflation Continues in April 2015. Much Less Deflation Was Expected by the Markets.

Written by Steven Hansen

Global trade prices continue to deflate year-over-year. Import prices are down 10.7% from a year ago, while export prices are down 6.3%. The market was expecting much less deflation.

Import Oil prices were up 0.7% month-over-month, but export agricultural prices fell 0.8%.

  • with import prices down 0.3% month-over-month, down 10.7% year-over-year;
  • and export prices down 0.7% month-over-month, down 6.3% year-over-year..
  • the markets were expecting:
Consensus Range Consensus Actual
Export Prices - M/M change -0.2 % to 0.3 % +0.1 % -0.7 %
Import Prices - M/M change -0.3 % to 1.0 % +0.4 % -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: Prices for U.S. imports declined 0.3 percent in March, and have not recorded a monthly advance since the index rose 0.3 percent in June 2014. Overall, import prices fell 11.2 percent between June 2014 and April 2015, and the index decreased 10.7 percent over the past year. Most of the decline since June 2014 resulted from lower fuel prices, as nonfuel prices declined 2.2 percent over the period.

All Exports: U.S. export prices fell 0.7 percent in April, the largest 1-month drop since a 1.7-percent decline in January. The April drop followed a 0.1-percent rise in March which was the first monthly advance since a 0.1-percent increase in July 2014. Lower prices in April for both agricultural exports and nonagricultural exports contributed to the overall drop in export prices. The price index for exports declined 6.3 percent over the past year.

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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