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Originally posted on 13 February 2013

Export Price Deflation Continues January 2013

Posted by John Lounsbury or Steven Hansen

Written by

In January 2013, year-over-year price deflation continues in import prices for 8 of the last 9 months. Export price price inflation grew marginally:

  • with imports up 0.6% month-over-month, down 1.3% year-over-year
  • and exports up 0.3% month-over-month, up 1.1% year-over-year.

There was general price moderation across most imports and export categories on the month-over-month change. However, the dominate factor in the year-over-year changes were rising oil import prices and falling food export 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 Imports: Import prices increased 0.6 percent in January, the first monthly advance since a 0.3 percent rise in October. Higher fuel prices were the largest contributor to the January advance, although nonfuel prices also increased. Despite the January rise, import prices declined 1.3 percent over the past year and have not risen on a 12-month basis since the index increased 0.8 percent between April 2011 and April 2012.

All Exports: Export prices increased 0.3 percent in January, the first monthly advance since a 0.1 percent uptick in October. Higher nonagricultural prices more than offset declining agricultural prices. The price index for overall exports increased 1.1 percent for the year ended in January and was driven by a 10.7 percent advance in agricultural prices.

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).

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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