Written by Steven Hansen
In February 2013, year-over-year price deflation continues in import prices for 9 of the last 10 months – although the amount of deflation is now microscopic. Export price price inflation grew marginally:
- with imports up 1.1% month-over-month, down 0.3% year-over-year
- and exports up 0.8% month-over-month, up 1.5% year-over-year.
The dominate factors in the month-over-month changes were rising oil import prices and rising 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 1.1 percent in February, the largest monthly advance since a 1.2 percent rise in August 2012. The advance followed a 0.6 percent increase in January, after import prices fell the final quarter of 2012. Despite the February advance, import prices fell 0.3 percent over the past year, and have not recorded a year-over-year increase since April 2012.
All Exports: Export prices rose 0.8 percent in February, the largest monthly gain since a similar 0.8 percent advance in September 2012. Higher agricultural and nonagricultural prices each contributed to the February increase. The price index for overall exports rose 1.5 percent for the year ended in February, the largest 12-month increase since the index advanced a similar 1.5 percent between October 2011 and October 2012.
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 for January 2013 occurring in the economy according to multiple measurements by a single agency (BLS):
- consumers (CPI) = 1.6% year-over-year
- Finished manufactured goods (PPI) = +1.4% year-over-year
- Exports = Up 1.1% year-over-year
- Imports = Down 1.3% year-over-year
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.