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Economy in Brief

Import Prices Surged Again
by Tom Moeller October 13, 2005

The 2.3% rise in import prices last month more than doubled Consensus expectations for a 1.0% increase. Surprising was a 1.2% gain in nonpetroleum prices that was a record for any one month.

Petroleum prices also were strong and the 7.3% increase came after a downwardly revised 6.0% August increase.

The strength in import prices other than petroleum reflected a 5.0% (11.3% y/y) pop in non-oil industrial supplies. Broad based strength was evident in a 2.6% (12.6% y/y) gain in chemical prices and a 2.9% (12.0% y/y) increase in nonferrous metals. Prices for nonauto consumer goods rose 0.3% (1.4% y/y) following two months of decline and capital goods prices were unchanged for the second month (-0.3% y/y). Computer, peripheral & semiconductor prices fell 0.4% (-5.9% y/y). Excluding computers capital goods prices rose 0.3% (2.5% y/y).

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 and a lower 57% against the real value of the dollar.

Export prices jumped 0.9% as nonagricultural prices surged 1.1% (3.8% y/y).

Exchange Rate Pass-Through to Import Prices in the Euro Area from the Federal Reserve Bank of New York can be found here.

Import/Export Prices (NSA) Sept Aug Y/Y 2004 2003 2002
Import - All Commodities 2.3% 1.2% 9.9% 5.6% 2.9% -2.5%
  Petroleum 7.3% 6.0% 48.9% 30.5% 21.0% 3.0%
  Non-petroleum 1.2% 0.1% 3.0% 2.6% 1.1% -2.4%
Export - All Commodities 0.9% -0.1% 3.8% 3.9% 1.6% -1.0%
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