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posted on 10 December 2015

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

Written by Steven Hansen

Trade prices continue to deflate year-over-year, and energy / agriculture prices drove this month's decline.

Import Oil prices were down 2.5 % month-over-month, and export agricultural prices decreased 1.1 %.

  • with import prices down 0.4 % month-over-month, down 9.4 % year-over-year;
  • and export prices down 0.6 % month-over-month, down 6.3 % year-over-year..
  • the markets were expecting (from Bloomberg):
Consensus Range Consensus Actual
Export Prices - M/M change -0.4 % to 0.0 % -0.3 % -0.6 %
Import Prices - M/M change -1.2 % to 0.0 % -0.8 % -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: Overall import prices decreased 0.4 percent in November, after falling 0.3 percent in October and 1.1 percent in September. Import prices have trended down throughout 2015, declining each month with the exception of May and June. Prices for imports fell 9.4 percent for the year ended in November, and have not increased on a 12-month basis since the index rose 0.9 percent in July 2014.

All Exports: Prices for U.S exports declined 0.6 percent in November, following a 0.2-percent decline in October and a 0.6-percent decrease in September. Lower prices for both agricultural and nonagricultural exports contributed to the November decline in overall export prices. The price index for overall exports only recorded 1 monthly advance over the past year and declined 6.3 percent between November 2014 and November 2015.

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