Global| Sep 17 2007U.S. Import Price Inflation Tame
by:Tom Moeller
|in:Economy in Brief
Summary
Overall, August import prices fell 0.3% last month. The decline was led by a 1.3% drop in petroleum prices. Consensus expectations had been for a 0.2% increase. A reversal in that decline is likely for the September figures. Already [...]
Overall, August import prices fell 0.3% last month. The decline was led by a 1.3% drop in petroleum prices. Consensus expectations had been for a 0.2% increase. A reversal in that decline is likely for the September figures. Already in September, prices for Brent crude oil have averaged $75.76 versus an August average of $70.80 and on Friday were $76.99.
Less petroleum, however import price inflation was also tame last month and posted a 0.1% decline. The decline was the first since January. It followed a bit of strength in 2Q when prices posted an average monthly increase of 0.9%. During the last ten years there has been a 66% (negative) 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. The correlation is a reduced 47% against a broader basket of currencies. Against a broad basket of major currencies, the dollar this year is down roughly 6% since yearend '06 and it's down roughly 10% from the high during 2005.Why a Dollar Depreciation May Not Close the U.S. Trade Deficit from the Federal Reserve Bank of New York is available here.
Lower prices for industrial supplies & materials excluding petroleum accounted for the decline in nonpetroleum prices last month with a 1.0% (+6.0% y/y) decline. Lower prices for chemicals (+3.8% y/y) led the m/m decline. Building materials prices also fell m/m (+0.8% y/y) as did . The detailed import price series can be found in the Haver USINT database.
Prices for nonauto consumer goods rose 0.2% (1.4% y/y) and apparel prices were unchanged m/m (0.6% y/y) after showing some strength early in the year.Capital goods prices rose 0.2% (0.4% y/y) for the fourth consecutive month. Prices for computers, peripheral and semiconductors rose 0.2% (-5.1% y/y). Less the high tech sector, capital goods prices rose 0.2% (2.8% y/y).
Overall export prices rose 0.2% and gains continued to decelerate. Enough to drop the y/y increase to 3.6% y/y from a high of 5.4% in February. Agricultural prices fell 1.0% (17.6% y/y) and nonagricultural export prices rose 0.1% (2.4% y/y).
| Import/Export Prices (NSA) | August | July | Y/Y | 2006 | 2005 | 2004 |
|---|---|---|---|---|---|---|
| Import - All Commodities | -0.3% | 1.3% | 1.9% | 4.9% | 7.5% | 5.6% |
| Petroleum | -1.3% | 6.4% | 1.5% | 20.6% | 37.6% | 30.5% |
| Non-petroleum | -0.1% | 0.1% | 2.3% | 1.7% | 2.7% | 2.6% |
| Export- All Commodities | -0.1% | 0.2% | 3.6% | 3.6% | 3.2% | 3.9% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
