Export / Import Prices Deflation Continues in September 2013

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In September 2013, year-over-year export and import prices deflated. Import prices have deflated year-over year for 14 of the last 15 months.

  • with imports up 0.2% month-over-month, down 1.0% year-over-year;
  • and exports up 0.3% month-over-month, down 1.6% year-over-year.

The dominate factors in the month-over-month changes were higher fuel prices and higher food prices.

There is only 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 trade 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 strengthening of the dollar relative to other currencies.

According to the press release:

All Imports: Import prices rose 0.2 percent in September following a 0.2 percent advance the previous month. Those were the first monthly increases for the index since a 0.9 percent rise in February. Higher fuel prices were the largest contributor to the September advance in overall import prices, although nonfuel prices increased as well. Despite the recent advances, import prices declined 1.0 percent over the past 12 months, the second consecutive month of decreasing year-over-year changes.

All Exports: Export prices advanced 0.3 percent in September, the largest monthly rise since a 0.7 percent increase in February. Higher nonagricultural and agricultural prices each contributed to the September increase. Between September 2012 and September 2013, however, export prices fell 1.6 percent, the largest year-over-year decline since the index fell 2.1 percent between June 2011 and June 2012.

How moderate the price increases have been over the past year is obvious from the graphic below.

Month-over-Month Change – Import Prices (blue line) and Export Prices (red line)

The biggest mover of import and export prices are oil (imports) and agricultural products (exports).

Oil Import Price Change Month-over-Month (blue line) and Agriculture Export Change Month-over-Month (red line)

Export / Import prices are the first inflation numbers reported for September. Here are rates of year-over-year inflation for August 2013 (previous reporting month) occurring in the economy according to multiple measurements by a single agency (BLS):

Each rate of inflation is measuring a different pulse point, and each represents the breadbasket of costs / prices relative to that grouping.

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 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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