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Economy in Brief

Oil Lifts U.S. Import Costs While Nonoil Prices Fall For Eighth Month
by Tom Moeller April 9, 2009

U.S. import prices rose for the first month since last July due to a rise in oil prices. Overall, the 0.5% rise in import prices was the first though pricing power continued weak due to the worldwide recession. During the last twelve months, the 14.9% decline in import prices was a record for the series which dates back to 1983. The March figure compares to Consensus expectations for a 0.9% increase.

Last month, petroleum prices firmed another 10.5% following the 4.4% February gain. This month, the average cost of $51.33 per barrel of Brent crude is even higher than the March level.

That strength was offset, however, by the worldwide recession. Nonoil import prices fell during March by 0.7% and that was the eighth consecutive monthly decline. During that period prices have fallen 7.0%.

Through early April, the foreign exchange value of the dollar rose 17.0% 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.

Capital goods import prices during March fell by another 0.3% and on a three-month basis prices fell at a 3.0% annual rate after 5%-to-6% rates of increase early in 2008. Excluding the lower prices of computers, March prices of capital goods fell 0.4% for the second month. Three-month growth was -1.1% which was a reversal of the 4.3% increase during all of last year. Prices of computers, peripherals & accessories were unchanged month-to-month and down at an 8.2% rate during the last three months.

The recession's toll on prices was notably evident in the 0.5% decline in March prices for nonauto consumer goods. Their three-month rate of change was a negative 1.5% versus the 5.9% peak rate of growth in early-2008. Durable nonauto consumer goods prices fell at a 3.9% 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 at a reduced 0.8% rate during that period but the gain was offset by a 14.4% rate of decline in home entertainment product prices.

Total export prices fell another 0.6% last month and at a 1.0% rate during the last three. Nonagricultural export prices fell 0.3% (5.0% y/y) and agricultural prices fell 3.5% (-21.8% y/y).

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

The Success of the CPFF? from the Federal Reserve Bank of St. Louis is available here.

Import/Export Prices (NSA, %) March February Y/Y 2008 2007 2006
Import - All Commodities 0.5 -0.1 -14.9 11.5 4.2 4.9
  Petroleum 10.5 4.4 -52.0 37.7 11.6 20.6
  Nonpetroleum -0.7 -0.6 -3.7 5.3 2.7 1.7
Export- All Commodities -0.6 -0.2 -6.7 6.0 4.9 3.6
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