Written by Steven Hansen
In December 2012, year-over-year price deflation continues in import prices for 7 of the last 8 months. Export price price inflation grew marginally:
- with imports down 0.1% month-over-month, down 1.5% year-over-year
- and exports down 0.1% month-over-month, up 1.1% year-over-year.
There was general price weakness across most imports and export categories on the month-over-month change. However, the dominate factor in the year-over-year changes were 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: Export prices fell 0.1 percent in December after a 0.7 percent decline the previous month. Decreasing nonagricultural prices in December and November more than offset rising prices for agricultural exports. Despite the recent declines, the price index for overall exports rose 1.1 percent in 2012. That increase followed a 3.6 percent advance in 2011, and was the smallest calendar-year rise since the index declined 2.9 percent in 2008.
All Imports: Import prices declined for the second consecutive month in December after increasing the three months prior to November. Overall, import prices fell 1.5 percent in 2012, the first calendar year decrease for the index since a 10.1 percent drop in 2008. Import prices had risen 8.5 percent in 2011, 5.3 percent in 2010, and 8.6 percent in 2009.
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):
- consumers (CPI) = 1.8% year-over-year (November 2012)
- Finished manufactured goods (PPI) = +2.3% year-over-year (November 2012)
- Exports = Up 0.7% year-over-year (November 2012)
- Imports = Down 1.6% year-over-year (November 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.