January 2020 Import Year-over-Year Inflation Declined To 0.3%

Written by Steven Hansen

Year-over-year import price indices inflation slowed but export prices are now growing year-over-year.

Import Oil prices were down 2.2 % month-over-month, and export agricultural prices up 2.0 %.

• 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:

Imports: Import prices were unchanged in January, after rising in December and November. Prices for U.S. imports rose 0.3 percent from January 2019 to January 2020. The price index for overall imports advanced on a 12- month basis for the second consecutive month, after not recording an over-the-year increase since the index rose 0.1 percent for the year ended March 2019. (See table 1.) Fuel Imports: Prices for import fuel declined 2.2 percent in January, led by lower prices for both petroleum and natural gas. The January decrease was the largest monthly drop since the index fell 4.2 percent in August. Petroleum prices fell 1.7 percent in January following a 1.0-percent increase in December and a 0.9-percent advance in November. The price index for natural gas declined 11.7 percent in January, after rising 141.3 percent over the previous 5 months. Despite the decline in January, import fuel prices increased 11.3 percent over the past 12 months, driven by an 11.3-percent advance in petroleum prices and a 15.7- percent rise in natural gas prices.

Exports: U.S. export prices rose 0.7 percent in January, the largest monthly advance since the index increased 0.7 percent in March. In January, rising prices for both agricultural and nonagricultural exports contributed to the overall increase. Prices for exports also advanced on a 12-month basis, increasing 0.5 percent in January. The rise in January was the first 12-month advance since the index increased 0.2 percent for the year ended in April. (See table 2.) Agricultural Exports: The price index for agricultural exports advanced 2.0 percent in January following a decrease of 0.1 percent in December and increases of 2.4 percent in November and 1.7 percent in October. Rising prices for vegetables, soybeans, wheat, and corn in January more than offset lower prices for fruit, meat, and nuts. Prices for agricultural exports also advanced over the past 12 months, rising 3.1 percent from January 2019 to January 2020.

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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