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posted on 10 February 2017

Import and Export Price Year-over-Year Inflation Significantly Grows in January 2017

Written by Steven Hansen

Import and export price growth continues 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 (fuel imports was the driver of the increase). Export prices are generally indexed to market conditions - which would indicate inflation in global markets (but agriculture items deflated).

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 3.7 % year-over-year;
  • and export prices up 0.1 % month-over-month, up 2.3 % year-over-year..
  • the markets were expecting (from Bloomberg):
Consensus Range Consensus Actual
Import Prices - M/M change 0.0 % to 0.8 % +0.3 % +0.4 %
Export Prices - M/M change -0.1 % to 0.2 % +0.1 % +0.1 %

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 increased 0.4 percent in January following a 0.5-percent advance in December. The price index for overall imports has trended up since March 2016 and rose 3.7 percent over the past year. The advance between January 2016 and January 2017 was the largest 12-month rise since the index increased 5.1 percent in February 2012.

All Exports: Export prices ticked up 0.1 percent in January, following a 0.4-percent increase in December. Rising prices for nonagricultural exports more than offset falling agricultural prices in each of the 2 months. With the exception of a 0.8-percent drop in August 2016, export prices have trended up since April 2016 and rose 2.3 percent for the year ended in January. The 2.3-percent rise was the largest 12-month advance since the index increased 2.6 percent between January 2011 and January 2012.

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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