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posted on 11 March 2016

Import and Export Price Year-over-Year Deflation Continues in February 2016.

Written by Steven Hansen

Trade prices continue to deflate year-over-year.

Import Oil prices were down 3.9 % month-over-month, and export agricultural prices increased 0.6 %.

  • with import prices down 0.3 % month-over-month, down 6.1 % year-over-year;
  • and export prices down 0.4 % month-over-month, down 6.0 % year-over-year..
  • the markets were expecting (from Bloomberg):
Consensus Range Consensus Actual
Export Prices - M/M change -1.0 % to -0.2 % -0.5 % -0.4 %
Import Prices - M/M change -1.5 % to -0.1 % -0.8 % -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: U.S. import prices fell 0.3 percent in February and have not recorded a monthly advance since the index ticked up 0.1 percent in June 2015. The February decrease followed declines of 1.0 percent in January and 1.2 percent in December. The price index for overall imports decreased 6.1 percent between February 2015 and February 2016. Despite the downward trend over the past 8 months, the 12-month drop recorded in February was the smallest over-the-year decline since the index fell 5.6 percent for the year ended in December 2014.

All Exports: Overall export prices decreased 0.4 percent in February as declining nonagricultural prices more than offset rising agricultural prices. The February decline followed decreases of 0.8 percent in January and 1.1 percent in December. The price index for overall exports has not recorded a 1-month increase since the index advanced 0.5 percent in May 2015. Export prices fell 6.0 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 usually 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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