Written by Steven Hansen
There is absolutely no correlation between economic activity, recessions and export / import prices. Prices can be rising or falling going into a recession. Econintersect follows this data series to adjust economic activity for the effects of inflation where there are clear relationships.
The story remains the continually moderating year-over-year inflation – however, this moderating cycle should shortly end. Exports are now up only 0.7% year-over-year and imports up 0.5% (up 1.3% if oil is excluded).
March 2012 export prices rose 1.1% month-over-month while import prices rose 3.6%. The April rise in import prices moderated due to decline in price of fuels, while the rise in export prices was driven by agriculture products.
According to the press release:
All Imports: Prices for U.S. imports fell 0.5 percent in April, the first monthly decrease since a 0.4 percent decline in October 2011 and the largest one-month drop since the index decreased 0.6 percent in June 2011. Despite the April decline, import prices rose 0.5 percent over the past year, although that was the smallest 12-month advance since the index last recorded a year-over-year decrease in October 2009.
All Exports: U.S. export prices increased 0.4 percent in April as agricultural and nonagricultural prices each contributed to the advance. The April rise in overall export prices followed a 1.5 percent increase in the first quarter of 2012. Export prices advanced 0.7 percent for the April 2011-12 period, the smallest year-over-year increase since the index rose 0.4 percent between November 2008 and November 2009. The 12-month increase in April was led by higher nonagricultural prices which more than offset declining agricultural prices over the past year.
How moderate the price increases have been over the past year is obvious from the graphic below.
There are different rates of inflation occurring in the economy according to multiple measurements by a single agency (BLS):
- consumers (CPI) = 2.7% (March 2012)
- manufacturing / production (PPI) = 1.8% (March 2012)
- Exports = 0.9% (March 2012)
- Imports = 3.4% (March 2012)
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 0.1% year-over-year, and has a 24.1% weight in the import index.
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.