May 2019 Import Price Year-Over-Year Inflation Declines to -1.5%

Year-over-year import and export prices declined.

Analyst Opinion of the Import / Export Price Situation

Import and export pricing declined and is now the lowest in the last 12 months

Import Oil prices were down -1.0 % month-over-month, and export agricultural prices were down 1.0 %.​

• the markets were expecting (from Econoday):

There is only a marginal correlation between economic activity, recessions, and export/import prices. Prices can be rising or falling going into a recession or entering a period of expansion. Econintersect follows this data series to adjust economic activity for the effects of inflation where there are clear relationships.

Econintersect follows this series to adjust data for inflation.

Year-over-Year Change - Import Prices (blue line) and Export Prices (red line)

 

There are three cases of deflation outside of a recession - early 1990′s, late 1990′s, and mid 2000′s. Import price deflation is normally associated with the strengthening of the dollar relative to other currencies.

According to the press release:

All Imports: U.S. Import prices fell 0.3 percent in May, the first monthly decline since a 1.4-percent drop in December. Import prices advanced 1.8 percent from December to April before the downturn in May. The price index for overall imports decreased 1.5 percent over the past 12 months, matching the drop in January. These were the largest over-the-year declines since the index fell 2.2 percent in August 2016. (See table 1.) Fuel Imports: Import fuel prices declined 1.0 percent in May, after rising 25.4 percent over the previous 4 months. Lower prices for both petroleum and natural gas contributed to the May decline. Petroleum prices fell 0.9 percent in May, after a 4.7-percent advance in April. The May decrease was the first monthly decline since a 15.3-percent drop in December. Natural gas prices fell 6.8 percent in May following a 51.1- percent decline the previous month. Overall fuel prices decreased 1.1 percent over the past year. The decline was driven by a 1.9-percent drop in petroleum prices which more than offset a 2.5-percent rise in natural gas prices.

All Exports: Prices for U.S. exports declined 0.2 percent in May, the first monthly drop since the index fell 0.6 percent in January. Lower prices for both agricultural and nonagricultural exports contributed to the May decline. Export prices decreased 0.7 percent over the past 12 months, the largest over-the-year decline since the index fell 1.1 percent in October 2016. (See table 2.) Agricultural Exports: The price index for agricultural exports declined 1.0 percent in May, after decreasing 1.5 percent the previous month. In May, lower prices for soybeans, wheat, and fruit more than offset higher prices for meat and vegetables. Agricultural export prices fell 5.3 percent over the past year, the largest 12-month drop since the index declined 9.1 percent in April 2016. A 20.6-percent decrease in soybeans prices for the year ended in May led the overall decline in agricultural prices. The drop in soybeans prices more than offset higher vegetable prices over the past 12 months.

Month-over-Month Change - Import Prices (blue line) and Export Prices (red line)

The biggest mover of import and export prices are usually oil (imports) and agricultural products (exports).

Oil Import Price Change Month-over-Month (blue line) and Agriculture Export Change Month-over-Month (red line)

Caveats on the Use of the Export / Import Price Index

Both import and export prices index values shown in this post is a weighted average for the entire category of exports or imports. The BLS has many sub-categories relating to a particular commodity or goods. Econintersect using spot checks believes these subindexes are accurate.