Little Signs of Life in Import and Export Prices

Import prices rose only 0.1% in December despite a 1.8% jump in energy. Export prices fell 0.1%.

Import Prices Month-Over-Month​ and Year-Over-Year

All Imports: Import prices rose 0.1 percent in December following 0.8-percent advances in 2 of the previous 3 months. The index has not recorded a monthly decline since falling 0.2 percent in July. Prices for U.S imports increased 3.0 percent in 2017, after advancing 1.9 percent the previous year. The advance in 2017 was the largest calendar-year increase since import prices rose 8.5 percent in 2011.

Fuel Imports: Import fuel prices increased 1.8 percent in December, after rising 8.4 percent in November. The price index for import fuel has not recorded a monthly decline since falling 1.0 percent in July. The December rise was driven by a 2.0-percent increase in petroleum prices which more than offset a 4.9-percent decline in natural gas prices. Import fuel prices rose 18.4 percent in 2017 following a 24.7-percent advance the previous year. Prior to 2016, import fuel prices had not recorded a calendar-year increase since 2011. In 2017, a 20.6-percent gain in petroleum prices more than offset a 15.7-percent drop in natural gas prices.

All Imports Excluding Fuel: In contrast, the price index for nonfuel imports edged down 0.1 percent in December, the first monthly decline since a 0.1-percent drop in July. The decline in December was led by lower prices for foods, feeds, and beverages; consumer goods; and nonfuel industrial supplies and materials. Despite the December downturn, nonfuel import prices increased 1.4 percent in 2017, after a 0.2-percent advance the previous year. The 2017 rise was the largest calendar-year increase since the index advanced 3.4 percent in 2011. In 2017, rising prices for nonfuel industrial supplies and materials; capital goods; consumer goods; and foods, feeds, and beverages all contributed to the advance in nonfuel prices. Of the major import areas, only prices for automotive vehicles decreased in 2017.

Chart and bullet points from the BLS report on Import and Export Prices for December.

Export Prices Month-Over-Month​ and Year-Over-Year

All Exports: Prices for U.S. exports fell 0.1 percent in December, the first monthly decline for the index since a 0.1-percent decrease in June. The December drop was led by falling agricultural prices; the price index for nonagricultural prices recorded no change. Export prices rose 2.6 percent in 2017 following a 1.3-percent rise in 2016. The 2017 advance was the largest calendar-year increase since 2011 when the index rose 3.6 percent.

Agricultural Exports: Agricultural export prices declined 0.4 percent in December, after decreasing 0.8 percent in November. The December drop was driven by a 14.4-percent decline in vegetable prices, although lower fruit prices also contributed. Despite the December decrease, the price index for agricultural exports rose 1.8 percent in 2017, after a 0.3-percent drop the previous year. The 2017 advance was the first calendar-year rise since the index increased 13.4 percent in 2012. Higher meat prices were the largest contributor to the advance in agricultural prices in 2017.

All Exports Excluding Agriculture: Prices for nonagricultural exports recorded no change in December following a 0.6-percent advance in November. In December, prices for capital goods and consumer goods advanced and prices for nonagricultural industrial supplies and materials and automotive vehicles decreased. The price index for nonagricultural exports rose 2.7 percent in 2017, the largest calendar-year increase since the index advanced 4.0 percent in 2011. The 2017 increase was primarily led by higher prices for nonagricultural industrial supplies and materials.

Economists Miss the Mark

The Bloomberg Econoday consensus expected a 0.4% rise in import prices and a 0.3% rise in export prices. Both consensus estimates widely missed the mark.

Despite a sizable 2.0 percent rise in petroleum, import prices rose only 0.1 percent in December which falls short of Econoday's low estimate. Import prices excluding petroleum fell 0.2 percent in a disappointing result that will heighten concern over the lack of inflation.

December's export prices are likewise weak, down 0.1 percent overall with agricultural prices down 0.4 percent. Prices for the nation's finished exports remain dead flat, up only 0.1 percent for capital goods in the month, down 0.1 percent for vehicles with consumer goods up 0.2 percent.

Year-on-year rates are led by overall imports at a respectable looking plus 3.0 percent with the ex-petroleum reading, however, up only 1.3 percent. Yearly prices of finished imports are minus 0.3 percent for vehicles, plus 0.2 percent for consumer goods, and up 0.7 percent for capital goods. Total export prices are up 2.6 percent with agricultural prices up only 1.8 percent. The yearly breakdowns for finished goods are similar to those of imports, all flat.

This report had been showing some pressure in prior reports as have producer prices which will be updated tomorrow. But consumer prices haven't been showing much life at all and today's report won't be raising expectations for any traction to appear anytime soon.

​Synopsis

It's pretty clear pricing pressures are directly related to energy. Even non-fuel components have an energy component. Fuels go into fertilizers and the production of manufactured goods.

If the price of energy turns lower, what little price pressures there are will abate.

Mike "Mish" Shedlock

“If the price of energy turns lower, what little price pressures there are will abate.”

And conversely, if the Russians can meddle, cajole and destabilize them higher…. Ideally by ways that increase demand for their “other” industry, armaments…

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