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Economy in Brief

Petroleum Drives Import Prices Higher, Uncommon Rounding Issue Causes Larger Decline in Export Prices
by Gerald D. Cohen  January 16, 2020

• Import prices rose 0.3% in December as fuel prices jumped 2.8%. Excluding fuels, import prices were unchanged.

• Export prices declined 0.2%. Rounding at lower levels of the aggregation of the price index accounted for a larger decline in the headline index than its subcomponents.

Import prices grew 0.3% during December (0.5% year-on-year), following a slightly downwardly revised 0.1% gain in November (was 0.2%). The Action Economics Forecast Survey correctly anticipated December's 0.3% gain. On an annual average basis, import prices were down 1.3% y/y in 2019 after growing 3.1% in 2018. These figures are not seasonally adjusted and do not include import duties.

The increase in import prices last month was driven by a 2.8% jump in fuel import costs (19.3% y/y). Nonfuel import prices were unchanged (-1.4% y/y). Among key end-use categories, capital goods, the largest category of imports, edged up 0.1% (-1.7% y/y). Nonauto consumer goods prices, the second largest, were unchanged (-0.6% y/y). Motor vehicle prices increased 0.1% (-0.6% y/y).

Export prices decreased 0.2% in December (-0.7% y/y), following an unrevised 0.2% gain in November. Forecasters' expected a 0.2% decline in December. The agricultural and non-agricultural subcomponents, which make up the entirety of the overall index, both declined 0.1% (-1.3% and -0.6% y/y respectively). We contacted the Bureau of Labor Statistics to explain this inconsistency and they noted that it is the result of rounding that takes place on detailed components of the index -- likely at a lower level than the top-line end-use categories discussed below -- and is very unusual.

On an annual average basis, import prices declined 0.8% y/y in 2019 after rising 3.4% in 2018. Among key end use categories, capital goods prices, the largest category making up over one-third of all goods exports, were unchanged in December (0.5% y/y). Non-agricultural industrial supplies & materials, the second largest category, decreased 0.3% (-2.4% y/y). Nonauto consumer goods prices edged down 0.1% (+0.5%).

The import and export price series can be found in Haver's USECON database. Detailed figures are available in the USINT database. The expectations figure from the Action Economics Forecast Survey is in the AS1REPNA database.

Import/Export Prices (NSA, %) Dec Nov Oct Dec Y/Y 2019 2018 2017
Imports - All Commodities 0.3 0.1 -0.4 0.5 -1.3 3.1 2.9
  Fuels 2.8 1.3 -1.7 19.3 -2.1 20.8 25.6
  Nonfuels 0.0 -0.1 -0.2 -1.4 -1.1 1.3 1.0
Exports - All Commodities -0.2 0.2 0.0 -0.7 -0.8 3.4 2.4
  Agricultural -0.1 2.2 1.7 -1.3 -0.5 0.6 1.5
  Nonagricultural -0.1 0.0 -0.2 -0.6 -0.9 3.7 2.5
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