March 2020 Import Year-over-Year Inflation Declined To -4.1%

Written by Steven Hansen

Year-over-year import price indices inflation slowed and are now deep 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: The price index for U.S. imports declined 2.3 percent in March, the largest monthly drop since import prices fell 3.2 percent in January 2015. The March decline followed a 0.7-percent decrease in February and 0.2- percent advances in each of the 3 months prior to that. Import prices also fell on a 12-month basis, declining 4.1 percent from March 2019 to March 2020. The decrease was the largest over-the-year drop since the index fell 4.7 percent for the 12 months ended June 2016. Import fuel prices fell 26.8 percent in March, after decreasing 9.0 percent in February. The March decline, led by a 27.4-percent drop in petroleum prices, was the largest decrease in import fuel prices since the index fell 27.8 percent in November 2008. The decline in petroleum prices followed an 8.8-percent drop the previous month. Natural gas prices also fell in March, decreasing 16.5 percent, after declining 14.0 percent in February and 12.2 percent in January. Import fuel prices fell 36.2 percent over the past year; lower petroleum prices and natural gas prices both contributed to the decline.

Exports: Prices for U.S. exports declined 1.6 percent in March, after falling 1.1 percent in February and rising 0.6 percent in January. The March decrease was the largest monthly drop in export prices since the index declined 1.7 percent in January 2015. Decreasing prices for both nonagricultural exports and agricultural exports contributed to the March drop. U.S. export prices fell 3.6 percent for the year ended in March, the largest 12-month decrease since a 4.5-percent decline from May 2015 to May 2016. (See table 2.) Agricultural Exports: Export agricultural prices declined 1.4 percent in March following a 2.7-percent decrease the previous month. In March, lower prices for other animal feeds, vegetables, nuts, cotton, and wheat more than offset higher prices for fruit, soybeans, and meat. Prices for agricultural exports fell 2.2 percent over the past year, the largest 12-month drop since the index decreased 5.3 percent for the year ended May 2019.

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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