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Economy in Brief

U.S. Import Prices Down Sharply Again: Both Oil & Nonoil
by Tom Moeller January 14, 2009

During December, total U.S. import prices declined another 4.2% after the revised 7.0% November drop. The decline fell short of Consensus expectations for a 5.3% decline.

Petroleum prices continued down sharply last month by 21.4%. However, a recent turnaround has lifted imported oil prices by 9.0% versus the December average.

December import prices less petroleum were down for the fifth straight month. The 1.1% decline lowered them by 13.6% (AR) during the last three months versus the 12%-to-13% rates of positive growth this past spring.

December-to-December, the foreign exchange value of the dollar rose 9.3% and thus reduced the change in U.S. import prices. During the last ten years there has been an 83% (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.

Capital goods import prices fell another 0.3% and on a three-month basis prices fell at a 3.4% annual rate after a 5%-to-6% rate of increase earlier this year. Less the lower prices of computers, capital goods prices fell 0.2% and the three-month growth rate fell to 1.8% rate over the last three months after 9.0% growth earlier this year. Prices of computers, peripherals & accessories were down at an 8.1% rate during the last three months.

Prices for nonauto consumer goods ticked up 0.1% last month but the three-month rate of change remained a negative 0.8% versus the 5.9% peak earlier this year. Durable goods prices overall fell at a 0.8% rate during the last three months versus a 6.2% rate of increase earlier this year.

Total export prices fell 2.3% due to another sharp decline in agricultural prices. Their 6.5% drop left them down at a 60.2% annual rate during the last three months. Nonagricultural export prices by 1.9% for the fifth consecutive monthly decline.

Troubled Asset Relief Program is yesterday's testimony by Fed Vice-Chairman Donald L. Kohn and it is available here.

Import/Export Prices (NSA, %) December November Y/Y 2008 2007 2006
Import - All Commodities -4.2 -7.0 -9.3 11.6 4.2 4.9
  Petroleum -21.4 -28.5 -47.0 38.3 11.6 20.6
  Nonpetroleum -1.1 -1.8 0.9 5.3 2.7 1.7
Export- All Commodities -2.3 -3.4 -3.2 6.0 4.9 3.6
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