December 2019 Import Year-over-Year Inflation Grows To 0.5%

Written by Steven Hansen

Year-over-year import price indices returned to growth but export prices remain in contraction year-over-year.

Import Oil prices were up 2.8 % month-over-month, and export agricultural prices were down 0.1 %.

• the markets were expecting (from Econoday):

There is only a 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 the strengthening of the dollar relative to other currencies.

According to the press release:

All Imports: The price index for U.S. imports rose 0.3 percent in December, the largest monthly advance since the index increased 0.6 percent in March. Prices for imports rose 0.5 percent in 2019, after decreasing 0.9 percent in 2018. The 12-month advance in December was the largest over-the-year increase since the index rose 0.7 percent between November 2017 and November 2018. (See table 1.) Fuel Imports: Prices for import fuel increased 2.8 percent in December following a 1.3-percent advance the previous month. Higher December prices for both petroleum and natural gas contributed to the overall increase in fuel prices. Petroleum prices rose 2.1 percent in December, after not changing in November; prices for natural gas advanced 19.4 percent following a 42.0-percent November jump. The price index for import fuel increased 19.3 percent in 2019 following a 13.1-percent drop the previous year. A 22.3-percent rise in petroleum prices over the past year more than offset lower natural gas prices. Despite advancing 123.7 percent over the past quarter, prices for natural gas fell 13.3 percent in 2019.

All Exports: U.S. export prices fell 0.2 percent in December following a 0.2-percent increase in November. Lower prices for both nonagricultural exports and agricultural exports contributed to the decrease. Prices for overall exports declined 0.7 percent in 2019 following a 1.1-percent increase in 2018. The 2019 drop was the first calendar-year fall since the index declined 6.6 percent in 2015. (See table 2.) Agricultural Exports: Prices for agricultural exports decreased 0.1 percent in December, after increasing 2.2 percent in November and 1.7 percent in October. In December, decreasing prices for soybeans, fruit, and vegetables more than offset higher meat prices. The price index for agricultural exports fell 1.3 percent over the past year following a 2.3-percent increase in 2018. Prior to 2019, agricultural prices had not declined for a calendar-year since 2016.

Month-over-Month Change – Import Prices (blue line) and Export Prices (red line)

The biggest mover of import and export prices is 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 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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