Written by Steven Hansen
Trade prices continue to deflate year-over-year, and energy prices again drove this month’s decline.
Import Oil prices were down 9.5 % month-over-month, and export agricultural prices decreased 1.0 %. Agriculture price decline was essentially the same as other export price decline.
- with import prices down 1.2 % month-over-month, down 8.2 % year-over-year;
- and export prices down 1.1 % month-over-month, down 6.5 % year-over-year..
- the markets were expecting (from Bloomberg):
| Consensus Range | Consensus | Actual | |
| Export Prices – M/M change | -0.8 % to -0.1 % | -0.5 % | -1.1 % |
| Import Prices – M/M change | -2.1 % to -0.2 % | -1.4 % | -1.2 % |
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: Overall import prices fell 1.2 percent in December, the largest monthly drop for the index since a 1.8-percent decline in August. While most of the December decrease was attributable to falling fuel prices, nonfuel prices continued to trend down as well. Import prices fell 8.2 percent in 2015, the largest calendar-year decline since the index fell 10.1 percent in 2008.
All Exports: The price index for U.S. exports decreased 1.1 percent in December, the largest 1-month drop since a 1.4-percent decline in August. In December both agricultural and nonagricultural prices contributed to the overall decline. Prices for U.S. exports decreased 6.5 percent in 2015, the largest calendar-year drop since the index was first published in 1983.
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 usually oil (imports) and agricultural products (exports). This month, it was industrial supplies and fuel which drove the decline in imports, and industrial supplies and agriculture drove the decline in export items.
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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