U.S. Import Prices Decline With Drop In Oil And Other Prices

U.S. import prices last month declined a slightly more-than-expected 0.7%. Prices have fallen sharply since last year due to lower oil prices, the firmer dollar and the global economic recession.

The recent gain in petroleum prices took a breather last month and fell 2.8% after four consecutive months of double-digit increase. This month, however, crude oil prices have more than reversed the earlier decline with a rise to an average $71.75 per barrel.

Non-oil import prices reversed course last month with a 0.2% decline and since March prices have been roughly unchanged. 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.)

Food prices took an about face last month with a 0.8% decline (-7.3% y/y) that reversed the gains during the prior two months. Prices for nonauto consumer goods fell 0.4% (-1.2% y/y). Durable consumer goods prices fell 0.3% (-1.6% y/y) as household goods fell and home entertainment equipment prices also were down by 1.4% y/y. Apparel prices reversed earlier stability and continued down with a 0.5% flop (-0.6% y/y).

Capital goods import prices during July increased a modest 0.2% (-1.5% y/y) after little change during the prior three months. Excluding computers, capital goods prices rose 0.2% but they're still down 0.3% y/y. Prices of computers, peripherals & accessories inched up 0.3% but they're down 4.8% during the last year.

Total export prices reversed some of their earlier strengthening with a 0.3% decline. The latest overall drop was led by a 4.9% (-22.3% y/y) decline in agricultural prices which reversed all of the June increase. Nonagricultural export prices firmed again and posted a 0.2% uptick but they're still down 6.5% y/y.