Written by Steven Hansen
Year-over-year import price inflation is trending strongly upward, whilst export price growth remains in a very tight and insignificant inflation range. Both food and oil price indices declined this month.
- with imports up 0.1% month-over-month, up 1.2% year-over-year;
- and exports down 0.4% month-over-month, up 0.2% year-over-year..
- the markets were expecting:
|Export Prices – M/M change||0.0 % to 0.4 %||0.2 %||-0.4%|
|Import Prices – M/M change||0.2 % to 0.6 %||0.4 %||+0.1%|
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.
Econintersect follows this series to adjust data for inflation.
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. Import price deflation is normally associated with strengthening of the dollar relative to other currencies.
According to the press release:
All Imports: The price index for overall imports continued to trend up in 2014, ticking up 0.1 percent in June, after advancing 0.3 percent the previous month. U.S. import prices increased 1.9 percent over the first half of 2014, leading import prices up 1.2 percent for the year ended in June. The year-over-year increase in June was the largest 12-month advance for import prices since the index rose 3.5 percent between March 2011 and March 2012.
All Exports: U.S. export prices fell for the second time in 3 months in June, declining 0.4 percent, after ticking up 0.1 percent in May and falling 1.0 percent in April. In June, lower prices for both agricultural prices and nonagricultural prices contributed to the overall decline. The 1.4-percent drop over the second quarter of 2014 was the largest 3-month decrease since a 1.6-percent drop between February and May 2013. Export prices rose 0.2 percent for the year ended in June.
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 (red line)
Export / Import prices are the first inflation numbers reported each month.
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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