August 2020 Import Year-over-Year Inflation Now -1.4%

Written by Steven Hansen

Year-over-year import price indices inflation remained in contraction and moved from a revised -2.8 % to -1.4 %.

Import Oil prices moved from a revised +15.1 % to +3.3 % month-over-month, and export agricultural prices up from a revised 1.5 % to -2.2 %.

• 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: Prices for U.S. imports advanced 0.9 percent in August, after rising 3.3 percent from April to July. Prior to that, import prices decreased 5.6 percent from January to April. Despite the recent increases, U.S. import prices declined 1.4 percent for the year ended in August. The price index for import fuel rose 3.3 percent in August following increases of 15.1 percent in July, 21.3 percent in June, and 13.9 percent in May. In August, higher prices for both petroleum and natural gas contributed to the advance. Petroleum prices increased 2.9 percent in August, after rising 63.3 percent from April to July. The price index for natural gas advanced 12.2 percent in August following a 9.1-percent drop the previous month. Despite the increases in each of the past 4 months, import fuel prices fell 22.2 percent from August 2019 to August 2020. Prices for petroleum declined 24.1 percent and natural gas prices increased 53.0 percent over the past year.

Exports: The price index for U.S. exports increased 0.5 percent in August, after advancing 0.9 percent in July and 1.8 percent in June. In August, rising nonagricultural prices more than offset falling agricultural prices. U.S. export prices declined 2.8 percent over the past 12 months, the smallest over-the-year decrease since February 2020. (See table 2.) Agricultural Exports: Prices for agricultural exports declined 2.2 percent in August following consecutive 1.6-percent increases in July and June. In August, declining prices for vegetables, corn, and dairy products, which fell 11.8 percent, 7.1 percent, and 9.9 percent, respectively, drove the drop in agricultural prices. Export agricultural prices also fell over the past year, decreasing 2.9 percent led by a 16.1-percent drop in corn prices, a 24.4-percent fall in nut prices, and a 5.0-percent decline in meat prices.

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.

include(“/home/aleta/public_html/files/ad_openx.htm”); ?>

Permanent link to most recent post on this topic