·
Overall import prices increased 0.2% last month following two months of
sharp decline and compared to Consensus expectations for no change.· The increase occurred despite a 1.6% decline in the prices of petroleum imports after October's 10.1% plunge, which was deeper than initially reported. So far in December the price of Brent crude oil has risen roughly four dollars from the $59.36 per bbl. averaged in November.
· Less petroleum import prices reversed the October decline with a 0.7% increase. During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a lower 47% against a broader basket of currencies.
· Prices for nonoil industrial supplies & materials reversed all of the prior month's decline with a 2.9% (1.7% y/y) increase. Prices for nondurables less petroleum jumped 6.5% (-10.9% y/y) in November following several months of decline this year. Prices for durable industrial supplies & materials (14.7% y/y) were strong early this year but m/m price gains have evaporated. These prices are unchanged since June.
· Capital goods prices were unchanged
for the fourth straight month (0.2% y/y) and excluding a 0.1% (-3.6%
y/y) increase in computers, capital goods prices also were unchanged
(2.0% y/y) in November. Prices for nonauto consumer goods additionally
were unchanged (1.1% y/y).
· Export prices rose 0.4% after two months of decline as nonagricultural commodities prices ticked up 0.1% (3.4% y/y) and agricultural export prices surged 4.4% (10.4% y/y).
· The Adjustment of Global External Imbalances: Does Partial Exchange Rate Pass-through to Trade Prices Matter? from the Federal Reserve Board is available here.
· The Internationalization of the Dollar and Trade Balance Adjustment from the Federal Reserve Bank of New York can be found here.