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posted on 10 January 2018

December 2017 Import and Export Price Year-over-Year Inflation Rate Decreased

Written by Steven Hansen

Year-over-year import and export price inflation decreased.

Analyst Opinion of the Import / Export Price Situation

The significant growth in this month's changes were fuel imports whilst food prices moderated.

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

  • with import prices up 3.0 % year-over-year;
  • and export prices up 2.6 % year-over-year..
  • the markets were expecting (from Bloomberg):
Consensus Range Consensus Actual
Import Prices - M/M change 0.2 % to 0.8 % +0.4 % +0.1 %
Export Prices - M/M change 0.2 % to 0.4 % +0.3 % -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 rose 0.1 percent in December following 0.8-percent advances in 2 of the previous 3 months. The index has not recorded a monthly decline since falling 0.2 percent in July. Prices for U.S imports increased 3.0 percent in 2017, after advancing 1.9 percent the previous year. The advance in 2017 was the largest calendar-year increase since import prices rose 8.5 percent in 2011.

All Exports: Prices for U.S. exports fell 0.1 percent in December, the first monthly decline for the index since a 0.1-percent decrease in June. The December drop was led by falling agricultural prices; the price index for nonagricultural prices recorded no change. Export prices rose 2.6 percent in 2017 following a 1.3- percent rise in 2016. The 2017 advance was the largest calendar-year increase since 2011 when the index rose 3.6 percent.

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)

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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