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posted on 15 June 2017

May 2017 Import and Export Price Year-over-Year Inflation Lower

Written by Steven Hansen

Import and export price inflation continues although the year-over-year rate of increase slowed.

Analyst Opinion of the Import / Export Price Situation

The elephant in this month's decline are fuel / oil and agriculture commodities. If one ignores these commodities, the year-over-year inflation rate for imports and exports is higher.

Import Oil prices were down 3.8 % month-over-month, and export agricultural prices were up 0.9 %.

  • with import prices down 0.3 % month-over-month, up 2.1 % year-over-year;
  • and export prices down 0.7 % month-over-month, up 1.4 % year-over-year..
  • the markets were expecting (from Bloomberg):
Consensus Range Consensus Actual
Import Prices - M/M change -0.6 % to 0.2 % +0.0 % -0.3 %
Export Prices - M/M change 0.0 % to 0.2 % +0.1 % -0.7 %

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 decreased 0.3 percent in May, the largest monthly drop since the index fell 0.5 percent in February 2016. The decline was driven by falling fuel prices, unlike last month when higher nonfuel prices more than offset decreasing fuel prices. The price index for U.S. imports rose 2.1 percent for the 12 months ended in May. The last over-the-year decline in import prices was a 0.2-percent decrease in October 2016.

All Exports: The price index for overall exports fell 0.7 percent in May following increases of 0.2 percent in each of the previous 2 months. The May decrease was the first monthly drop since August 2016 when the index declined 0.8 percent. Prices for agricultural and nonagricultural exports contributed to the overall drop in export prices. The price index for U.S. exports rose 1.4 percent for the year ended in May.

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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