Written by Steven Hansen
Trade prices continue to deflate year-over-year – and the largest 1-month drop since a 3.2% decline in January
Import Oil prices were down 5.7% month-over-month, but export agricultural prices increased 0.8%.
- with import prices down 0.9% month-over-month, down 10.4% year-over-year;
- and export prices down 0.2% month-over-month, down 6.1% year-over-year..
- the markets were expecting (from Bloomberg):
Consensus Range | Consensus | Actual | |
Export Prices – M/M change | -1.0 % to 0.0 % | -0.3 % | -0.2 % |
Import Prices – M/M change | -2.0 % to 0.8 % | -1.0 % | -0.9 % |
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: prices fell 0.9 percent in July, the first monthly decline since the index decreased 0.2 percent in April and the largest 1-month drop since a 3.2-percent decline in January. A downturn in fuel prices in July drove much of the overall decrease, although a continued downward trend in nonfuel prices also supported the drop. The price index for overall imports decreased 10.4 percent for the year ended in July, and has not recorded a 12-month advance since the index rose 0.9 percent in July 2014.
All Exports: U.S. export prices fell 0.2 percent in July as decreasing nonagricultural prices more than offset an upturn in agricultural prices. The July drop followed a 0.3-percent decrease in June and a 0.5-percent increase in May. The price index for exports also declined over the past year, falling 6.1 percent, and has not recorded a 12-month increase since the index rose 0.4 percent in August 2014.
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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