Written by Steven Hansen
In April 2013, year-over-year price deflation continues in import prices for 11 of the last 12 months . Export price price are also deflating this month:
- with imports down 0.5% month-over-month, down 2.6% year-over-year
- and exports down 0.7% month-over-month, down 0.9% year-over-year.
The dominate factors in the month-over-month changes were falling oil import prices and falling food export prices – however export prices fall was broad based.
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: The price index for U.S. imports decreased for the second consecutive month in April, after increasing the two months prior to March. The April decrease was largely driven by lower fuel prices, although nonfuel prices also declined in April. Import prices fell 2.6 percent over the past 12 months, the largest year-over-year decline since a 3.3 percent decrease between July 2011 and July 2012.
All Exports: The price index for U.S. exports declined 0.7 percent in April, the largest monthly decrease since the index fell 1.7 percent in June 2012. Falling prices for both nonagricultural and agricultural exports each contributed to the decline. U.S. export prices also fell for the April 2012-13 period, decreasing 0.9 percent. The 12-month decrease was led by lower nonagricultural prices, which more than offset rising agricultural prices over the past year.
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 April. Here are rates of year-over-year inflation for March 2013 (previous reporting month) occurring in the economy according to multiple measurements by a single agency (BLS):
- consumers (CPI) = 1.3% year-over-year
- Finished manufactured goods (PPI) = +1.1% year-over-year
- Exports = Down 2.7% 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.