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posted on 12 January 2017

Import and Export Price Year-over-Year Inflation Returns in December 2016.

Written by Steven Hansen

Import and export prices are now inflating year-over-year after years of deflation.

Analyst Opinion of the Import / Export Price Situation

As predicted, both export and import prices began inflating in December. What does this mean? Not a whole lot to consumers as non-fuel imports deflated this month. Export prices are generally indexed to market conditions - which would indicate inflation in global markets.

Import Oil prices were up 7.3 % month-over-month, and export agricultural prices were down 0.3 %.

  • with import prices up 0.4 % month-over-month, up 1.8 % year-over-year;
  • and export prices up 0.3 % month-over-month, up 1.1 % year-over-year..
  • the markets were expecting (from Bloomberg):
Consensus Range Consensus Actual
Import Prices - M/M change -0.1 % to 1.4 % +0.7 % +0.4 %
Export Prices - M/M change -0.2 % to 0.3 % +0.2 % +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: Import prices resumed an upward trend in December, rising 0.4 percent following a 0.2- percent decline in November. Prices for overall imports advanced 1.8 percent between December 2015 and December 2016, the largest 12-month increase since the index rose 3.5 percent in March 2012. The increase in 2016 was the first calendar-year advance since import prices rose 8.5 percent in 2011.

All Exports: Export prices advanced 0.3 percent in December matching the 0.3-percent rise in September; those were the largest increases for the index since a 0.8-percent rise in June. In December, higher nonagricultural prices more than offset declining agricultural prices. Prices for overall exports rose 1.1 percent for the year ended in December, the first 12-month increase since the index advanced 0.4 percent in August 2014 and the largest over-the-year rise since a 1.5-percent increase in February 2013.

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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