January 2019 Import Price Year-over-Year Inflation Now -1.7%

Written by Steven Hansen

Year-over-year import prices and export prices again declined significantly. The decline in prices was not expected.

Import Oil prices were down 3.2 % month-over-month, and export agricultural prices were down 2.1 %.

• with import prices down 1.7 % year-over-year;
• and export prices down 0.2 % year-over-year..
• the markets were expecting (from Econoday):

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 for U.S. imports declined 0.5 percent in January and 3.1 percent over the last 3 months. The 3-month drop was the largest decrease since the index fell 3.1 percent from July 2015 to October 2015. Import prices decreased 1.7 percent over the past 12 months, the largest over-the-year decline since the index fell 2.2 percent in August 2016. Fuel Imports: Import fuel prices decreased 3.2 percent in January and 22.5 percent over the past 3 months, the largest drop over a 3-month period since the index fell 29.2 percent for the 3 months ended in February 2016. The January drop was primarily driven by a 44.2-percent drop in natural gas prices; petroleum prices edged down 0.1 percent. The decline in natural gas prices followed a 138.8-percent increase over the fourth quarter of 2018. Fuel prices decreased 14.4 percent over the past year. A 14.5-percent drop in petroleum prices and a 20.0-percent decline in prices for natural gas each contributed to the overall decrease in fuel prices from January 2018 to January 2019. All Imports Excluding Fuel: The price index for nonfuel imports fell 0.2 percent in January. The January decrease was led by falling prices for nonfuel industrial supplies and materials; consumer goods; automotive vehicles; and foods, feeds, and beverages which more than offset higher prices for capital goods. Import prices excluding fuel also declined 0.2 percent over the past year.

All Exports: Prices for U.S. exports decreased 0.6 percent in January, after falling 0.6 percent in December and 0.8 percent in November. Export prices have only recorded one monthly advance since June. In January, both nonagricultural prices and agricultural prices contributed to the decline. The price index for overall exports decreased 0.2 percent for the year ended in January, the first 12-month decline since the index fell 0.2 percent in November 2016. Agricultural Exports: Agricultural export prices declined 2.1 percent in January, the largest monthly decrease since the index fell 5.2 percent in July. The January drop followed increases of 3.8 percent in December and 1.7 percent in November. A 34.6-percent fall in export vegetable prices drove the January decline in agricultural prices. Despite the January drop, export agricultural prices advanced 0.2 percent over the past year. All Exports Excluding Agriculture: The price index for nonagricultural exports declined 0.3 percent in January, after falling 1.1 percent in December and 1.0 percent in November. Decreasing prices for nonagricultural industrial supplies and materials and consumer goods more than offset higher prices for capital goods and automotive vehicles. Prices for nonagricultural exports fell 0.2 percent from January 2018 to January 2019, the first decrease over a 12-month period since the index declined 0.2 percent in November 2016. The drop over the past 12 months was driven by a 2.4-percent decrease in nonagricultural industrial supplies and materials prices.

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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