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Economy in Brief

U.S. Import Prices Dip With Oil
by Tom Moeller March 16, 2010

Earlier gains in import prices took a breather in February. However, a further increase is likely this month with the rise in oil prices. The Bureau of Labor Statistics indicated that last month import prices slipped 0.3% and roughly matched Consensus expectations for a 0.2% decline. Excluding petroleum import prices gained 0.2% which was down sharply from the increases during the prior four months.

Petroleum prices slipped 2.2% last month following their 4.4% January increase. That moderation, however, is proving to be short-lived. Brent crude oil prices in March have strengthened to nearly $80 per barrel from $74 last month.

For non-oil imports, the price gain moderated last month to 0.2% after gains of 0.5%-to-0.6%. The lower value of the dollar has now helped lift these prices at a 5.2% annual rate during the last three months following the 4.1% decline last year. (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.)

Food & beverage prices slipped 0.1% (+5.4% y/y) while prices for nonauto consumer goods also slipped 0.1%. They were unchanged y/y. That compares with a 1.0% y/y decline this past summer. The unchanged reading reflected a 0.6% increase in durable consumer goods prices after the 0.6% 2009 dip. Auto import prices rose a steady 0.6% y/y. Home entertainment equipment prices rose 0.8% after declining steadily since 1996. In contrast, household goods prices fell 1.1% y/y which was double the rate of decline last year. Finally, apparel prices were unchanged m/m as they were for all of last year.Capital goods fell 0.1% last month (-0.7% y/y) and excluding computers prices also fell 0.1% both m/m and y/y.

Total export prices slipped 0.5% last month and reversed the January gain. The decline reflected a 3.8% drop in agricultural export prices (+2.3% y/y) and a 0.2% drop in non-agricultural goods prices (+3.3% y/y).

Import/Export Prices (NSA, %) February January December Feb. Y/Y 2009 2008 2007
Import - All Commodities -0.3 1.3 0.2 11.2 -11.5 11.5 4.2
  Petroleum -2.2 4.4 -1.1 81.3 -35.9 37.7 11.6
  Nonpetroleum 0.2 0.5 0.5 2.1 -4.1 5.3 2.7
Export - All Commodities -0.5 0.7 0.7 3.1 -4.6 6.0 4.9
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