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Export Price Deflation Continues in November 2012

Written by Steven Hansen

In November 2012, the price deflation continues in import prices for the seventh month (last month’s inflation was wiped away with backward revision).  Export price price inflation moderated:

  • with imports down 0.9% month-over-month, down 1.6% year-over-year
  • and exports down 0.7% month-over-month, up 0.7% year-over-year.

There was general price weakness across most imports and export categories, lead by declining energy prices and 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 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.

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: Prices for overall exports decreased 0.7 percent in November after recording no change in October. The decline was driven by lower nonagricultural prices which more than offset a 0.1 percent uptick in agricultural prices. Despite the November decline, the price index for overall exports rose 0.7 percent over the past year.

All Imports: Import prices fell for the first time since July after rising 2.5 percent over the previous three months. A 3.0 percent decline in fuel prices mainly drove the November decrease in import prices, although nonfuel prices also decreased for the month. The price index for overall imports fell 1.6 percent over the past 12 months, a contrast to the previous 12-month period ended in November 2011 when import prices rose 10.1 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 oil (imports) and agricultural products (exports) – and both moderated 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):

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.

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