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Economy in Brief

U.S. Import Prices Strong
by Tom Moeller September 14, 2006

Total import prices rose 0.8% last month following an upwardly revised 1.0% increase during July. Consensus expectations had been for a 0.3% increase.

Less petroleum, import prices rose a firm 0.5%, the largest increase since May. Prices for nonoil industrial supplies & materials more than recouped a July decline with a 1.8% (11.4% y/y) surge led by higher prices for paper (7.9% y/y), chemicals (3.4% y/y) and metals (38.6% 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.

Capital goods prices rose 0.1% (-0.3% y/y) for the second month and rose 0.1% (1.9% y/y) excluding computers. Prices for nonauto consumer goods were unchanged (0.7% y/y) though prices for home entertainment equipment fell (-4.5% y/y).

Prices of petroleum imports jumped 2.3% after the 5.1% spike during July. Brent crude oil prices were about unchanged at $73.40 per barrel in August but have since fallen to $62.48.

Export prices rose 0.4% for the second consecutive month led by a 1.0% increase agricultural (3.5% y/y) and a 0.4% (5.3% y/y) rise in nonagricultural commodities.

Import/Export Prices (NSA) August July Y/Y 2005 2004 2003
Import - All Commodities 0.8% 1.0% 6.6% 7.5% 5.6% 2.9%
  Petroleum 2.3% 5.1% 24.3% 37.6% 30.5% 21.0%
  Non-petroleum 0.5% 0.0% 2.7% 2.7% 2.6% 1.1%
Export- All Commodities 0.4% 0.4% 5.2% 3.2% 3.9% 1.6%
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