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Economy in Brief

U.S. Import Prices Rise With Higher Oil Prices
by Tom Moeller June 12, 2009

During May, U.S. import prices moved higher again due to recent increases in oil prices The expected 1.3% gain followed a similar 1.1% rise during April and, since January, prices have risen by 2.9%. Nevertheless, earlier declines in prices were severe with the start of the global economic recession. Therefore the y/y change in import prices remained a negative 17.6%.

Higher petroleum prices have accelerated recent import price gains. The 8.3% increase last month was the fourth firm consecutive monthly rise and another strong gain is in store for this month. The price for a barrel of Brent Crude oil yesterday rose to $71.55. That's up nearly seven dollars, or ten percent, from the end of May. Crude oil prices have returned to where they were last October.

Non-oil import prices have firmed as well, though nowhere near as dramatically as oil. The lower value of the dollar as well as a firming U.S. economy undoubtedly were behind the 0.2% price uptick in May which left prices roughly flat over the last three months. While not strong, by any means, the stability compares to three-month price declines of 3.5% as recently as this past January. (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.) 

During May, capital goods import prices were unchanged after a 0.1% uptick during April. On a three-month basis, prices fell 0.3% after the 0.9% decline during March. Excluding computers, capital goods prices were unchanged in May and three-month growth remained a low -0.4%. Prices of computers, peripherals & accessories rose 0.2% last month but they were down 0.3% during the last three months. Regardless of that firming, computer prices remained 6.4% lower than last year.

Prices for nonauto consumer goods were unchanged in May, but here again there has been some firming versus earlier declines. The three-month rate of change amounted to -0.2% which compared to a -0.7% change as recently as January. Durable consumer goods prices rose 0.4% over the last three months after a -1.7% decline through January. Household goods and home entertainment equipment prices have firmed considerably. Moving the other way, declines in apparel prices have offset some of that strength in durables.

Total export prices have firmed and accompanied the gains in import prices. Last month they rose 0.6% led by a 3.6% (-14.7% y/y) rise in agricultural prices. Nonagricultural export prices also have firmed but not to the same degree. Last month they rose 0.3% and over three months they were up just 0.1% following a -6.0% decline as of the end of last year.

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

Risks and Resolutions: The "Day After" for Financial Institutions - A Conference Summary from the Federal Reserve Bank of Chicago can be found here.  

Import/Export Prices (NSA, %) May April Y/Y 2008 2007 2006
Import - All Commodities 1.3 1.1 -17.6 11.5 4.2 4.9
  Petroleum 8.3 9.8 -51.4 37.7 11.6 20.6
  Nonpetroleum 0.2 -0.2 -5.8 5.3 2.7 1.7
Export - All Commodities 0.6 0.4 -6.5 6.0 4.9 3.6
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