Written by Steven Hansen
In March 2013, year-over-year price deflation continues in import prices for 10 of the last 11 months . Export price price inflation grew marginally year-over-year but fell month-over-month:
- with imports down 0.5% month-over-month, down 2.7% year-over-year
- and exports down 0.4% month-over-month, up 0.3% year-over-year.
The dominate factors in the month-over-month changes were falling 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 fell 0.5 percent in March, the first monthly decline since a 0.6 percent decrease in December 2012. Falling fuel prices were the main contributor to the March drop. The price index for imports decreased 2.7 percent for the 12 months ended in March, the largest year-over-year decline since a 3.3 percent drop between July 2011 and July 2012. Import prices have not risen on a 12-month basis since April 2012.
All Exports: Export prices decreased 0.4 percent in March after rising 0.7 percent in February and 0.4 percent in January. Lower prices for agricultural and nonagricultural exports each contributed to the March downturn in overall export prices. Led by higher agricultural prices, prices for exports increased 0.3 percent for the March 2012-13 period, the smallest year-over-year advance since September 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
Export / Import prices are the first inflation numbers reported for March. Here are rates of year-over-year inflation for February 2013 (previous reporting month) occurring in the economy according to multiple measurements by a single agency (BLS):
- consumers (CPI) = 2.0% year-over-year
- Finished manufactured goods (PPI) = +1.4% year-over-year
- Exports = Up 1.1% year-over-year
- Imports = Down 0.3% 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.