May 2021 Import Year-over-Year Inflation Grows To +11.3%

Written by Steven Hansen

Year-over-year import price indices inflation grew from +10.6 % to +11.3 %.

Import Oil prices moved from a revised +1.6 % to +4.0 % month-over-month, and export agricultural prices up from +0.6 % to 6.1 %

• 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: U.S. import prices continued to trend up in May, rising 1.1 percent following increases of 0.8 percent in April, 1.5 percent in March, and 1.2 percent in February. Prices for U.S. imports have not recorded a decline since the index edged down 0.1 percent in October. The price index for U.S. imports advanced 11.3 percent for the year ended in May, the largest 12-month rise since a 12.7-percent increase from September 2010 to September 2011. Prices for import fuel rose 4.0 percent in May following a 1.6-percent advance in April. The price index for import fuel rose 109.6 percent for the year ended in May. Price increases for petroleum and natural gas drove both the May increase and the 12-month advance. Petroleum prices increased 3.8 percent in May, after rising 2.2 percent the previous month. Prices for import petroleum advanced 114.8 percent over the past 12 months. The price index for natural gas rose 7.8 percent in May following a 10.4-percent drop in April. Natural gas prices increased 64.1 percent from May 2020 to May 2021.

Exports: Prices for U.S. exports continued to rise in May, increasing 2.2 percent, after advances of 1.1 percent in April, 2.5 percent in March, and 1.6 percent in February. U.S. export prices have not recorded a monthly drop since a 3.5-percent decrease in April 2020. In May, higher prices for nonagricultural and agricultural exports both contributed to the overall advance. The price index for U.S. exports rose 17.4 percent from May 2020 to May 2021, the largest over-the-year increase in the series, which was first published in September 1983. The 12-month advance in May topped the previous high of 14.9 percent recorded the previous month. The price index for agricultural exports rose 6.1 percent in May following a 0.6- percent increase the previous month. The May advance was the largest 1-month rise since the index increased 7.6 percent in November 2010. In May, the advance was driven by an 11.1-percent rise in soybean prices, a 27.5-percent increase in corn prices, and an 18.8-percent advance in wheat prices. Prices for agricultural exports rose 33.6 percent over the past 12 months, the largest over-the-year increase since the index advanced 33.9 percent from April 2010 to April 2011.

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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