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Economy in Brief

U.S. Import Prices Up
by Tom Moeller December 14, 2006

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.

Import/Export Prices (NSA) November October Y/Y 2005 2004 2003
Import - All Commodities 0.2% -2.3% 1.2% 7.5% 5.6% 2.9%
  Petroleum -1.6% -10.1% 1.5% 37.6% 30.5% 21.0%
  Non-petroleum 0.7% -0.5% 1.3% 2.7% 2.6% 1.1%
Export- All Commodities 0.4% -0.3% 3.9% 3.2% 3.9% 1.6%
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