Written by Steven Hansen
October 2012 broke the 5 month string of import and export price deflation with imports rising 0.4% year-over-year and exports rising 1.4% year-over-year.
There was general price inflation across most imports, while export price inflation was constrained by moderating food prices.
There is only marginal 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.
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
According to the press release:
All Exports: Export prices recorded no change in October as rising nonagricultural prices were offset by a downturn in prices for agricultural exports. The price index for overall exports had risen in each of the previous three months, advancing 2.1 percent overall for the third quarter of 2012. Prices for overall exports increased 1.4 percent over the past year, the first 12-month advance for the index since April.
All Imports: Import prices rose for the third consecutive month in October, increasing 0.5 percent after a 1.1 percent advance in September and a 1.2 percent rise in August. This upturn was largely driven by higher fuel prices, although nonfuel prices also increased in October and September. Led by the recent advances, overall import prices ticked up 0.4 percent for the year ended in October, which was the first 12-month rise in import prices since April.
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 oil (imports) and agricultural products (exports) – and both moderated somewhat this month.
Oil Import Price Change Month-over-Month (blue line) and Agriculture Export Change Month-over-Month
There are different rates of year-over-year inflation occurring in the economy according to multiple measurements by a single agency (BLS):
- consumers (CPI) = 2.0% year-over-year (September 2012)
- Finished manufactured goods (PPI) = +2.1% year-over-year (September 2012)
- Exports = Contracted 0.5% year-over-year (September 2012)
- Imports = Contracted 0.6% year-over-year (September 2012)
Each rate of inflation is measuring a different pulse point, and each represents the breadbasket of costs / prices relative to that grouping.
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.