The average consumer won’t notice what happened to export / import (exim) prices in August 2011 as much as during the previous year. Inflation remains elevated, but import price increases were down year-over-year (YoY) to +13.0% from a downwardly adjusted 13.8% for July 2011. Export price increases were down to +9.6% YoY from 9.8% in July 2011. The average consumer will be much more sensitive to the MoM price changes, which have been in slight decline recently.
The price index for overall imports fell for the second time in three months in August, decreasing 0.4 percent following a 0.3 percent upturn in July and a 0.7 percent drop in June. Import prices declined 0.6 percent over the past four months after rising 13.7 percent between September 2010 and April 2011. Overall, the index increased 13.0 percent for the year ended in August, compared to a 13.8 percent advance for the July 2010-11 period. The August drop in overall import prices was driven by a 1.8 percent decline in fuel prices. The decrease was led by a 2.1 percent drop in petroleum prices which more than offset a 3.3 percent advance in the price index for natural gas. Despite declines in three of the past four months, fuel prices rose 41.1 percent over the past year. Prices for petroleum and natural gas each increased over the past 12 months, rising 43.5 percent and 8.0 percent, respectively.
Export prices resumed an upward trend in August, rising 0.5 percent following a 0.4 percent downturn in July. Higher prices for agricultural and nonagricultural exports each contributed to the overall advance in August. The price index for overall exports also increased over the past year, increasing 9.6 percent.
The latest data is telling us is that IMPORTED food and oil prices are still taking a breather from their recent price run-up. Export prices are rising due to agriculture exports – HOWEVER the year-over-year comparison is showing price increases have stopped accelerating at a very high rate. Why?
The YoY data is beginning to be compared against the start of an inflationary cycle. Even with some moderate price increases in August 2011, the increases in August 2010 were more.
There are different rates of inflation occurring in the economy according to multiple measurements by a single agency (BLS):
- consumers (CPI) = 3.6% (July 2011)
- manufacturing / production (PPI) = 7.2% (July 2011)
- Exports = 9.6% (August 2011)
- Imports = 13.0% (August 2011)
Each rate of inflation is measuring a different pulse point, and each represents the breadbasket of costs / prices relative to that grouping. It should be pointed out that fuel import prices are up over 41%, and has a 27% weight in the import index. Few consumers spend 27% of their income on fuel.