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Economy in Brief

U.S. Import Prices Fall With Lower Oil Costs
by Tom Moeller June 15, 2010

U.S. import prices in May posted their second monthly decline this year with lower energy prices. The Bureau of Labor Statistics indicated that, overall, import prices fell 0.6% last month but the decline was short of Consensus expectations for a 1.3% drop. Excluding petroleum, import prices rose 0.5%, the same as the upwardly revised April increase. During the last twelve months, energy prices increased by roughly one-third and non-oil import prices rose an elevated 3.7%.

Petroleum prices fell 5.0% last month and more-than reversed the prior month's increase. Nevertheless, energy prices have risen 4.0% this year following last year's 78.6% increase from December-to-December. Yesterday, Brent crude oil prices rose to $75.15 per barrel, their highest since mid-May.

Non-oil import prices prices continued to reflect the dollar's earlier weakness as well as the firmer U.S. economy. Prices rose 0.5% in May following an upwardly revised 0.5% April increase. As a result, prices rose at a 3.5% annual rate since December and reversed last year's 4.1% decline. (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.) 

Stronger food & beverage prices continued to provide lift to overall import prices this year with a 1.5% May increase, 12.8% (AR) gain YTD. That compares to a 2.8% decline during 2009. Prices for nonauto consumer goods also have turned and risen at a still-modest 0.7% rate this year after a 0.3% decline last year. Appliance prices have strengthened at a 5.3% rate after last year's more modest increase. Apparel prices have risen at a 0.5% annual rate after no change last year. Imported auto prices fell at a 1.1% rate YTD after a 0.4% uptick last year.  Capital goods slipped 0.5% YTD and excluding computers also slipped 0.4% YTD following a 0.7% gain last year.

Total export prices continued firm with a 0.7% increase last month after a 1.2% April gain. The rise reflected a 0.6% gain (8.2% YTD) in non-agricultural export prices and a 1.4% jump in agricultural goods prices (0.3% YTD).

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

The Global Recovery and Monetary Policy is this morning's speech by St. Louis Fed President James Bullard and it can be found here.

Import/Export Prices (NSA, %) May April March April Y/Y 2009 2008 2007
Import - All Commodities -0.6 1.1 0.4 8.6 -11.5 11.5 4.2
Petroleum -5.0 3.7 2.5 35.9 -35.9 37.7 11.6
Nonpetroleum 0.5 0.5 -0.1 3.7 -4.1 5.3 2.7
Export - All Commodities 0.7 1.2 0.7 5.8 -4.6 6.0 4.9
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