Import Prices Up Over 11% in April 2011

If the prices for imported items are up over 11% year-over-year (YoY) in April 2011, is the Consumer Price Index at 2.7% understating the real duress for the consumer?

Import prices rose 2.2 percent in April following a 2.6 percent advance in March, the first time import prices increased by more than two percent in consecutive months since June 2008. The price index for overall imports recorded an increase each month since October and rose 11.1 percent over the past year.  The 12-month advance in April was the largest year-over-year increase since an 11.2 percent gain between April 2009 and April 2010.

Export price YoY increase remained unchanged at 9.7%.

U.S. export prices advanced 1.1 percent in April, after rising 1.5 percent and 1.4 percent, respectively, in March and February. Higher prices for agricultural exports and nonagricultural exports contributed to the increases in each of the three months. Export prices rose 9.6 percent over the past year, matching the 12-month advance in March; those were the largest year-over-year increases since export prices jumped 10.2 percent in July 2008.

A good way to view these increases is that they represent the GOODS purchases of the consumer. From one-third to one-half of consumer spending goes to their home (and is one of the major elements in the CPI).  The rest of the money goes to service and goods needed.

When goods are going up over 10% a year (averaging export and import pricing) – this is a household budget breaking event if the trend persists.

It is a no-brainer that oil prices are up, that processed and unprocessed foods are up on average over 30% YoY – and that commodity imports (which represent 20% of the index) is up almost 35%.

It is likely the current dollar strengthening cycle, as well as a fall in commodity prices, if the trends continue, may allow these exim (export-import) price increases to moderate over the coming months.

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