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Economy in Brief

U.S. Import Prices Move Lower Despite Higher Oil Prices
by Tom Moeller March 13, 2009

U.S. import prices fell another 0.2% during February, dragged lower by the worldwide recession. The generalized decline, which offset the influence from higher oil prices, followed a little-revised 1.2% January drop. During the last twelve months, the 12.8% decline in import prices was the quickest in the series' history which dates back to 1983. February's figure fell short of Consensus expectations for a 0.7% drop.

Last month, petroleum prices firmed by 3.9%, reversing their January decline. This month, the average cost of $43.78 per barrel of Brent crude is even higher than the February level.

Offsetting that upturn in oil prices last month was a 0.6% drop in nonoil import prices. These prices have fallen during each of the last seven months and are down 6.3% during that period.

Through early March, the foreign exchange value of the dollar rose 21.0% versus its year-ago level and further reduced the pressure on U.S. import prices. During the last ten years, there has been a negative 81% 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.

February capital goods import prices slipped 0.4%. On a three-month basis, prices fell at a 2.6% annual rate after 5%-to-6% rates of increase during early 2008. Excluding the lower prices of computers, prices of capital goods fell 0.3% in February. Three-month growth was 0.4% after a 4.3% increase during all of last year. Prices of computers, peripherals & accessories fell 0.7% last month and were down at a 9.4% rate during the last three months.

Prices for nonauto consumer goods were unchanged in February for the second consecutive month. The three-month rate of change remained a negative 0.8% versus the 5.9% peak rate of growth in early-2008. Durable consumer goods prices overall fell at a 4.7% annual rate during the last three months, a reversal from the 6.2% peak rate of increase in early 2008. Still moving higher, apparel prices rose 0.2% during February. The 2.0% three-month rate of growth was stable with apparel prices during all of last year. In a reversal, motor vehicle & parts prices rose at a 1.5% rate during the last three months following declines late in 2008.

Total export prices ticked 0.1% lower last month and at a 6.9% rate during the last three. Nonagricultural export prices rose 0.1% for the second month (-3.3% y/y), but agricultural prices fell 1.7% (-15.2% y/y).

The import and export price series can be found in Haver's USECON database. Detailed figures are available in the USINT database.

Import/Export Prices (NSA, %) February January Y/Y 2008 2007 2006
Import - All Commodities -0.2 -1.2 -12.8 11.5 4.2 4.9
  Petroleum 3.9 -4.2 -52.4 37.7 11.6 20.6
  Nonpetroleum -0.6 -0.8 -1.9 5.3 2.7 1.7
Export- All Commodities -0.1 0.5 -4.5 6.0 4.9 3.6
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