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posted on 19 September 2017

August 2017 Import and Export Price Year-over-Year Inflation Significantly Increases

Written by Steven Hansen

Import and export price inflation continues with import prices and export prices up significantly.

Analyst Opinion of the Import / Export Price Situation

The elephant in this month's changes were fuel / oil commodities.

Import Oil prices were up 4.2 % month-over-month, and export agricultural prices were up 0.1 %.

  • with import prices up 0.6 % month-over-month, up 2.1 % year-over-year;
  • and export prices up 0.6 % 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 1.0 % +0.3 % +0.6 %
Export Prices - M/M change 0.1 % to 0.5 % +0.2 % +0.6 %

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 0.6 percent in August, the first monthly rise since a 0.2-percent increase in April and the largest advance since the index rose 0.6 percent in January. The last time import prices recorded a larger increase was a 0.7-percent advance in June 2016. Higher import prices for both fuel and nonfuel contributed to the rise in August. Prices for U.S. imports also increased over the past 12 months, advancing 2.1 percent.

All Exports: U.S. export prices rose 0.6 percent in August following a 0.5-percent increase the previous month. The August advance was the largest monthly rise since the index increased 0.8 percent in June 2016. Prices for exports advanced 2.3 percent over the past year. Both agricultural export prices and nonagricultural export prices contributed to the August and 12-month increases for overall export prices.

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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