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posted on 09 March 2017

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

Written by Steven Hansen

Import and export price growth continues after years of deflation.

Analyst Opinion of the Import / Export Price Situation

Yikes - seems like inflation is rampant? The elephant in this significant inflation is fuel / oil. If one ignores these commodities, the year-over-year inflation rate for imports and exports is almost zero.

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

  • with import prices up 0.2 % month-over-month, up 4.6 % year-over-year;
  • and export prices up 0.3 % month-over-month, up 3.1 % year-over-year..
  • the markets were expecting (from Bloomberg):
Consensus Range Consensus Actual
Import Prices - M/M change 0.0 % to 0.3 % +0.2 % +0.2 %
Export Prices - M/M change 0.0 % 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 rose for the third consecutive month in February, increasing 0.2 percent, after a 0.6-percent advance in January and a 0.4-percent rise in December. The increase in February was driven by rising nonfuel prices, unlike the previous 2 months when higher fuel prices led the advances. The price index for imports also rose over the past year, increasing 4.6 percent. That rise was the largest 12-month advance in import prices since a 5.1-percent increase in February 2012.

All Exports: Prices for U.S. exports advanced 0.3 percent in February and have not recorded a monthly decline since the index fell 0.8 percent in August. In February, rising prices for both agricultural exports and nonagricultural exports contributed to the overall advance. Export prices increased 3.1 percent over the past 12 months, the largest over-the-year rise since the index advanced 3.6 percent between December 2010 and December 2011.

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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