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posted on 12 May 2016

Import and Export Price Year-over-Year Deflation Moderated in April 2016.

Written by Steven Hansen

Trade prices continue to deflate year-over-year - although the rate of deflation declined this month.

Import Oil prices were up 3.3 % month-over-month, and export agricultural prices increased 0.5 %.

  • with import prices up 0.3 % month-over-month, down 5.7 % year-over-year;
  • and export prices up 0.5 % month-over-month, down 5.0 % year-over-year..
  • the markets were expecting (from Bloomberg):
Consensus Range Consensus Actual
Export Prices - M/M change 0.1 % to 1.7 % +0.6 % +0.5 %
Import Prices - M/M change -0.3 % to 0.5 % 0.0 % +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: The consecutive 0.3-percent increases in April and March were the first monthly advances since the index ticked up 0.1 percent in June 2015 and the largest increases since a 1.1-percent rise in May 2015. Higher fuel prices drove the April advance although nonfuel prices also contributed to the overall increase in import prices. Import prices declined 5.7 percent over the past year, the smallest over-the-year drop since the index fell 5.6 percent in December 2014.

All Exports: Prices for U.S. exports rose 0.5 percent in April, the first monthly advance for the index since a 0.5-percent increase in May 2015. Those advances are the largest 1-month rises since the index increased 0.9 percent in March 2014. The price index for U.S. exports fell 5.0 percent for the year ended in April, the smallest 12-month decline since the index decreased 5.0 percent from January 2014 to January 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).

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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