September 2020 Import Year-over-Year Inflation Now -1.1%

Written by Steven Hansen

Year-over-year import price indices inflation remained in contraction and moved from a revised -1.4 % to -1.1 %.

Import Oil prices moved from a revised +3.9 % to -2.9 % month-over-month, and export agricultural prices up from a revised -2.3 % to +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: U.S. import prices rose 0.3 percent in September, after increasing 4.2 percent from April to August. Despite the recent increases, overall import prices declined 1.1 percent for the year ended in September. The price index for U.S. imports has not increased on a 12-month basis since January 2020. Fuel Imports: Import fuel prices fell 2.9 percent in September following a 3.9-percent increase in August. The September decline was the first 1-month drop since April and was led by lower petroleum prices, which more than offset rising natural gas prices. In September, import petroleum prices also decreased for the first time since April, falling 4.2 percent. In contrast, natural gas prices advanced 26.2 percent in September, after increasing 12.9 percent the previous month. The September rise was the largest increase since the index advanced 44.3 percent in November 2019. Prices for import fuel decreased 25.2 percent from September 2019 to September 2020, as a 28.1-percent drop in petroleum prices more than offset a 94.8- percent rise in natural gas prices.

Exports: Prices for U.S. exports rose 0.6 percent in September, after advancing 3.3 percent from April to August. In September, higher prices for both agricultural and nonagricultural exports contributed to the overall rise. Despite the recent upward trend, prices for U.S. exports fell 1.8 percent over the past year. (See table 2.) Agricultural Exports: Agricultural export prices rose 2.7 percent in September following a 2.3-percent decrease the previous month. The September increase was the largest 1-month advance since the index rose 3.8 percent in December 2018. Higher prices for soybeans, corn, fruit, cotton, wheat, nuts, and meat more than offset lower prices for dairy products and eggs. Prices for agricultural exports increased 1.3 percent for the year ended in September, the first 12-month advance for the index since a 3.1-percent rise 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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