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Economy in Brief

Import Prices Declined
by Tom Moeller November 10, 2005

Import prices fell an expected 0.3% last month following the revised 2.3% spike in September. Petroleum prices were the source of weakness as they reversed more than half of the prior month's gain with a 4.4% drop. Crude oil prices fell 4.1% and "other" petroleum prices fell 14.4% but those decline were offset by a 20.9% (114.1% y/y) increase in natural gas.

Excluding petroleum, prices were strong for the second consecutive month and rose 0.8%. The gain reflected a 4.4% (16.1% y/y) rise in non-oil industrial supplies which repeated the gain in September. Elsewhere, paper prices rose 1.0% (3.8% y/y) and chemical prices jumped 2.1% (11.7% y/y). On the weak side, nonauto consumer goods prices fell 0.1% (+1.2% y/y) and capital goods prices slipped 0.3% (-0.5% y/y). Excluding another decline in computer prices, capital goods prices fell 0.1% (2.0% 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 0.6% as nonagricultural prices rose 0.6% (3.5% y/y).

Time-Varying Pass-Through from Import Prices to Consumer Prices: Evidence from an Event Study with Real-Time Data from the Federal Reserve Bank of New York is available here.

Import/Export Prices (NSA) Oct Sept Y/Y 2004 2003 2002
Import - All Commodities -0.3% 2.3% 8.1% 5.6% 2.9% -2.5%
  Petroleum -4.4% 8.0% 30.9% 30.5% 21.0% 3.0%
  Non-petroleum 0.8% 1.0% 3.7% 2.6% 1.1% -2.4%
Export - All Commodities 0.6% 0.8% 3.6% 3.9% 1.6% -1.0%
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