June 2021 Import Year-over-Year Inflation ‘Declines’ To +11.2%

Written by Steven Hansen

Year-over-year import price indices inflation marginally declined from +11.6 % to +11.2 %.

Import Oil prices moved from a revised +5.5 % to +4.7 % month-over-month, and export agricultural prices up from +6.1 % to 1.5 %

• 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 advanced 1.0 percent in June, after increases of 1.4 percent in May, 0.8 percent in April, and 1.5 percent in March. Prices for overall imports rose 11.2 percent for the year ended in June. The June 12-month advance followed an 11.6-percent increase from May 2020 to May 2021, the largest over-the-year rise since September 2011. Fuel Imports: Prices for import fuel advanced 4.7 percent in June following a 5.5-percent increase the previous month. Higher prices for petroleum and natural gas contributed to both advances. The price index for import petroleum rose 4.6 percent in June, after increasing 5.4 percent in May. Natural gas prices advanced 8.1 percent in June following a 7.9-percent rise the previous month. Prices for import fuel increased 85.1 percent from June 2020 to June 2021. The price indexes for petroleum and natural gas rose 87.7 percent and 72.3 percent, respectively, over the same period.

Exports: U.S. export prices increased 1.2 percent in June, after rising 6.0 percent from February to May. The price index for U.S. exports has not recorded a monthly decline since a 3.5-percent drop in April 2020. In June, higher prices for both agricultural and nonagricultural exports contributed to the overall advance in export prices. Prices for U.S. exports increased 16.8 percent from June 2020 to June 2021. The over-the-year advance in June followed a 17.5-percent rise for the year ended in May, which was the largest 12-month increase since the overall export price series was first published in September 1983. Agricultural Exports: Prices for agricultural exports advanced 1.5 percent in June following a 6.1-percent rise the previous month. Agricultural export prices have not recorded a monthly decline since a 2.2-percent decrease in August 2020. In June, a 10.6-percent advance in meat prices more than offset lower prices for corn, wheat, and soybeans. Prices for agricultural exports increased 33.5 percent over the past 12 months, primarily driven by higher soybean and corn 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.

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