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Economy in Brief

U.S. Import Prices Move Higher Again With Oil Price Gain
by Tom Moeller July 10, 2009

U.S. import prices last month continued rising with oil prices. The 3.2% rise was more than Consensus expectations for a 2.1% gain and it more than doubled the unrevised May  increase of 1.4%. However, as has been the case, earlier severe price declines at the start of the global economic recession left the y/y change in import prices a negative 17.4%.

Higher petroleum prices have accelerated recent import price gains. The 20.3% increase last month was the strongest of the last five consecutive monthly increases. This month, however, the rally in crude oil reversed and the price for a barrel of Brent Crude oil fell yesterday to $59.19 from the June average of $68.73.

Non-oil import prices continued to firm as well with the lower value of the dollar as well as a firming U.S. economy. The 0.2% uptick in June, combined with a slight downward revision to May prices, left them roughly flat over the last three months. This 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.)

Leading the strength in import prices last month was a 0.5% increase in foods prices but they still remained 5.2% lower than last year. Prices for nonauto consumer goods ticked up 0.1% but, here again, there has been firming versus earlier declines. The three-month rate of change amounted to 0.3% which compared to a -0.7% change as recently as January. Durable consumer goods prices rose 0.5% 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.

During June, capital goods import prices slipped 0.1% (-1.5% y/y) after no change during May. On a three-month basis, prices were unchanged after the 0.9% rate of decline through  March. Excluding computers, capital goods prices have firmed and three-month growth in prices rose to 0.1% from the low of -0.7%. Prices of computers, peripherals & accessories slipped 0.5% last month but the unchanged level over the last three compares with a 5.8% decline over the last year.

Total export prices have firmed and accompanied the gains in import prices. Last month they rose 1.1%. That followed a revised 0.5% May gain which was half that reported last month. The latest gain was led by a 4.8% (-12.5% y/y) rise in agricultural prices. Nonagricultural export prices also firmed and rose 0.8% (-5.7% y/y). Over the last three months they were up 1.2% 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.

Import/Export Prices (NSA, %) June May Y/Y 2008 2007 2006
Import - All Commodities 3.2 1.4 -17.4 11.5 4.2 4.9
  Petroleum 20.3 9.3 -45.9 37.7 11.6 20.6
  Nonpetroleum 0.2 0.1 -6.5 5.3 2.7 1.7
Export - All Commodities 1.1 0.5 -6.4 6.0 4.9 3.6

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