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posted on 09 October 2015

Import and Export Price Year-over-Year Deflation Continues in September 2015.

Written by Steven Hansen

Trade prices continue to deflate year-over-year, and energy prices had little to do with this month's decline.

Import Oil prices were down 13.3% month-over-month, but export agricultural prices decreased 2.6%.

  • with import prices down 0.1 % month-over-month, down 10.7 % year-over-year;
  • and export prices down 0.7 % month-over-month, down 7.4 % year-over-year..
  • the markets were expecting (from Bloomberg):
Consensus Range Consensus Actual
Export Prices - M/M change -0.5 % to 0.0 % -0.2 % -0.7 %
Import Prices - M/M change -0.9 % to 0.4 % -0.4 % -0.1 %

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: U.S. import prices fell 0.1 percent in September, following declines of 1.6 percent in August and 1.0 percent in July. Unlike the decreases the 2 previous months where falling fuel and nonfuel prices each contributed to the decline, the September drop was entirely driven by lower nonfuel prices. The price index for overall imports decreased 10.7 percent between September 2014 and September 2015 and has not recorded a 12-month increase since the index rose 0.9 percent for the year ended July 2014.

All Exports: Prices for U.S. exports fell 0.7 percent in September, following a 1.4-percent drop the previous month. Falling agricultural and nonagricultural export prices each contributed to the September and August declines. The price index for overall exports fell 7.4 percent over the past year, the largest yearover-year decrease for the index since an 8.3-percent drop for the 12 months 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 usually oil (imports) and agricultural products (exports). This month, it was non-fuel items which drove the decline in imports, and there was a general decline in all export items.

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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