April 2020 Import Year-over-Year Inflation Declined To -6.8%

Written by Steven Hansen

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

Import Oil prices were down 31.5 % month-over-month, and export agricultural prices down 3.1 %.

• 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:

Imports: TU.S. import prices fell 2.6 percent in April, the largest monthly drop since the index declined 3.2 percent in January 2015. The April decrease followed a 2.4-percent drop in March and a 0.7-percent decline in February. Prices for U.S. imports also fell on a 12-month basis, decreasing 6.8 percent for the year ended in April. The decrease was the largest 12-month drop since the index declined 8.3 percent from December 2014 to December 2015. Fuel Imports: Import fuel prices declined 31.5 percent in April, after decreasing 26.0 percent in March. The April decline was the largest 1-month drop since the index was first published monthly in September 1992. The decline in fuel prices was led by a 33.0-percent drop in the price index for import petroleum; natural gas prices also fell in April, decreasing 3.3 percent. Prices for import fuel declined 56.6 percent from April 2019 to April 2020, the largest 12-month drop since the index was first published in December 1984. Petroleum prices declined 58.5 percent over the past year, and more than offset a 5.9-percent advance in natural gas prices.

Exports: The price index for U.S. exports decreased 3.3 percent in April following declines of 1.7 percent in March and 1.2 percent in February. The April drop was the largest 1-month decrease in export prices since the index was first published on a monthly basis in December 1988. Declining prices for both nonagricultural exports and agricultural exports contributed to the April decrease. Prices for U.S. exports fell 7.0 percent from April 2019 to April 2020, the largest over-the-year decline since a 7.3-percent drop for the year ended September 2015. (See table 2.) Agricultural Exports: Prices for agricultural exports fell 3.1 percent in April, after decreasing 1.5 percent in March and 2.8 percent in February. The April drop was the largest decline since the index fell 5.2 percent in July 2018. Lower prices for corn, meat, cotton, fruit, soybeans, and nuts all contributed to the overall decline in April. The price index for agricultural exports decreased 4.1 percent over the past year, driven by falling prices for cotton, vegetables, corn, and meat.

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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