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posted on 10 November 2015

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

Written by Steven Hansen

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

Import Oil prices were down 2.0 % month-over-month, and export agricultural prices decreased 0.1 %.

  • with import prices down 0.5 % month-over-month, down 10.5 % year-over-year;
  • and export prices down 0.2 % month-over-month, down 6.7 % year-over-year..
  • the markets were expecting (from Bloomberg):
Consensus Range Consensus Actual
Export Prices - M/M change -0.5 % to 0.1 % -0.3 % ---- %
Import Prices - M/M change -0.4 % to 0.2 % -0.1 % -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 decreased 0.5 percent in October, continuing a downward trend for the index in 2015. Prices for U.S. imports previously decreased 0.6 percent in September, 1.8 percent in August, and 0.9 percent in July. The price index for overall imports declined 10.5 percent between October 2014 and October 2015, after decreasing 2.1 percent for the year ending in October 2014.

All Exports: The price index for U.S. exports declined 0.2 percent in October, following decreases of 0.6 percent in September and 1.4 percent in August. Lower prices for both agricultural exports and nonagricultural exports factored into the overall decrease in October. Overall export prices also declined over the past 12 months, decreasing 6.7 percent after a 0.7-percent decline for the year ending in October 2014.

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 industrial supplies which drove the decline in imports, and industrial supplies drove the decline in 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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