January 2018 Import and Export Price Year-over-Year Inflation Rate Grew

Written by Steven Hansen

Year-over-year import and export price inflation grew.

Import Oil prices were up 4.7 % month-over-month, and export agricultural prices were down 0.1 %.

• with import prices up 3.6 % year-over-year;
• and export prices up 3.4 % year-over-year..
• the markets were expecting (from Bloomberg):

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 U.S. imports rose 1.0 percent in January, after increases of 0.2 percent in December and 1.0 percent in November. The 1.0-percent advances were the largest 1-month rises since the index increased 1.2 percent in May 2016. Import prices advanced 3.6 percent between January 2017 and January 2018.

All Exports: U.S. export prices increased 0.8 percent in January. The index has not risen by more than 0.8 percent since the index advanced 1.1 percent in May 2016. In January, the increase in nonagricultural prices more than offset a decline in agricultural prices. The price index for exports increased 3.4 percent over the past 12 months.

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).

Oil Import Price Change Month-over-Month (blue line) and Agriculture Export Change Month-over-Month (red line)

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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