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Economy in Brief

U.S. and International Pricing Power Evaporates
by Tom Moeller  June 12, 2012

Less liquidity, weakness in the global economy and increased competition have taken a toll on international pricing power. U.S. import prices matched expectations and fell 1.0% during May following no-change in April, initially pegged as -0.5%. The year-to-year increase in import prices fell to a minimal 0.3%, as oil prices declined. Petroleum prices fell 4.2% last month after a 0.4% April slip. Brent crude oil fell to an average $111.67 per barrel from April's $120.37 and yesterday dropped further to $98.30. Non-oil import prices slipped 0.1% (+0.3% y/y) last month following a 0.1% uptick during April. The y/y change in non-oil import prices during the last twenty years has a 59% inverse correlation with the nominal trade-weighted exchange value of the US dollar vs. major currencies.

Imported food & beverage prices fell 0.7% last month (-2.6% y/y) while prices for non-oil industrial supplies slipped 0.1% (-3.6% y/y). Prices for non-auto consumer goods ticked down 0.1% (+2.1% y/y). Furniture prices were unchanged (3.4% y/y) for a second straight month but home entertainment equipment prices fell 0.5% (-6.4% y/y). Imported auto prices slipped 0.1% (+1.4% y/y) and imported capital goods prices were unchanged (0.9% y/y). Computer & peripherals prices were unchanged (-2.0% y/y) while excluding computers, capital goods prices also were unchanged (2.2% y/y).

U.S. export prices declined 0.4% (-0.1% y/y) as nonagricultural prices fell 0.5% (+0.1% y/y) but agricultural goods prices increased another 0.7% (-1.3% y/y). Prices of industrial supplies fell 1.7% (-3.7% y/y). Capital goods prices were unchanged (1.5% y/y) and nonauto consumer goods prices rebounded 0.7% (1.8% y/y). Prices for exported autos & parts ticked up 0.1% (2.7% 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 daily figure are in DAILY. The expectations figure is in the AS1REPNA database.

Import/Export Prices (NSA, %) May Apr Mar May Y/Y 2011 2010 2009
Imports - All Commodities -1.0 0.0 1.4 -0.3 10.9 6.9 -11.5
  Petroleum -4.2 -0.4 4.9 -2.0 36.5 28.4 -35.9
  Nonpetroleum -0.1 0.1 0.3 0.3 4.5 2.8 -4.1
Exports - All Commodities -0.4 0.4 0.8 -0.1 8.1 4.9 -4.6
  Agricultural 0.7 2.0 2.4 -1.3 22.3 7.9 -12.8
  Nonagricultural -0.5 0.2 0.5 0.1 6.6 4.6 -3.7
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