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Economy in Brief

Import Prices Back Down
by Tom Moeller March 15, 2006

One month U.S. import prices move up, the next month they're down. And sometimes, they remain unchanged. All three possibilities have been in evidence since last November. The trend is up but the rate of increase appears to have topped, but for how long? Last month, total import prices fell an expected 0.5% after a revised 1.4% jump during January.

Nonpetroleum import prices dropped 0.5% during February and reversed the upwardly revised 0.3% January rise. The fall reflected lower prices of foods, feeds and beverages where a 1.7% decline (+4.1% y/y) reversed much of the prior two months' strength. Industrial materials prices less petroleum also fell a sharp 2.2% (+9.9% y/y) due to a 19.2% m/m decline in natural gas prices (+40.8% y/y).

Prices for nonauto consumer goods were unchanged (-0.4% y/y) for the second month in the last three but capital goods prices rose 0.2% (-1.3% y/y). Excluding a 0.1% decline in computer prices (-6.4% y/y), capital goods prices rose 0.4% (1.0% y/y). Motor vehicle & parts prices rose 0.1% (0.4% y/y).

Petroleum prices also reversed course last month and fell 0.7% after a 6.9% spike during January. Crude oil prices dipped 0.9% (39.95 y/y) after an 8.7% spike during January. So far in March the price of Brent Crude has averaged $60.80 versus $60.19 per bbl. during February.

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 were unchanged m/m and the 2.6% y/y gain was below the increases of 2004 and 2005.

Import/Export Prices (NSA) Feb Jan Y/Y 2005 2004 2003
Import - All Commodities -0.5% 1.4% 7.4% 7.5% 5.6% 2.9%
  Petroleum -0.7% 6.9% 40.8% 37.6% 30.5% 21.0%
  Non-petroleum -0.5% 0.3% 1.8% 2.7% 2.6% 1.1%
Export - All Commodities 0.0% 0.7% 2.6% 3.2% 3.9% 1.6%
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