February 2020 Import Year-over-Year Inflation Declined To -1.2%

Written by Steven Hansen

Year-over-year import price indices inflation slowed and are now in contraction.

Import Oil prices were down 7.7 % month-over-month, and export agricultural prices down 2.7 %.

• 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 declined 0.5 percent in February, after rising 0.1 percent in January and 0.2 percent in December. The decline in February was the largest decrease since the index fell 0.6 percent in August. Prices for U.S. imports decreased 1.2 percent from February 2019 to February 2020, as declining prices for both nonfuel and fuel imports contributed to the movement. (See table 1.) Fuel Imports: Import fuel prices decreased 7.7 percent in February, the largest monthly decline since the index dropped 7.8 percent in June 2019. The February decrease was led by lower prices for petroleum, though falling prices for natural gas also contributed to the monthly decline. Petroleum prices fell 7.6 percent in February following no change in January and a 0.5-percent advance in December. The price index for natural gas declined 12.4 percent in February, after decreasing 13.2 percent in January. Import fuel prices fell 5.8 percent over the past 12 months, driven by a 5.5-percent drop in petroleum prices and a 13.9- percent decline in natural gas prices.

Exports: U.S. export prices decreased 1.1 percent in February, the largest monthly decline since the index fell 1.1 percent in December 2015. In February, falling prices for both agricultural and nonagricultural exports contributed to the overall decrease. Prices for exports declined 1.3 percent on a 12-month basis in February, after rising 0.4 percent from January 2019 to January 2020. (See table 2.) Agricultural Exports: The price index for agricultural exports declined 2.7 percent in February following an increase of 2.1 percent in January. Falling prices for vegetables, soybeans, and meat in February more than offset higher fruit prices. Prices for agricultural exports increased over the past 12 months, rising 0.2 percent from February 2019 to February 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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