May 2020 Import Year-Over-Year Inflation Now -6.0%

Year-over-year import price indices inflation remained in contraction and moved from 6.8 % to 6.0 %.

Analyst Opinion of the Import / Export Price Situation

Fuel prices increased this month but remain in contraction year-over-year.

Import Oil prices were moved from -31.0 % to +20.5 % month-over-month, and export agricultural prices down 0.5 %.

• 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:

Imports: The Producer Price Index for final demand rose 0.4 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed declines of 1.3 percent in April and 0.2 percent in March. (See table A.) On an unadjusted basis, the final demand index decreased 0.8 percent for the 12 months ended in May. In May, the advance in the final demand index is attributable to prices for final demand goods, which climbed 1.6 percent. In contrast, the index for final demand services fell 0.2 percent. Prices for final demand less foods, energy, and trade services edged up 0.1 percent in May, following three consecutive declines. For the 12 months ended in May, the index for final demand less foods, energy, and trade services moved down 0.4 percent, the largest 12-month decrease since the index began in August 2013.

Exports: U.S. export prices increased 0.5 percent in May, after falling 3.3 percent in April, 1.4 percent in March, and 1.2 percent in February. Higher nonagricultural prices in May more than offset lower prices for agricultural exports. Despite the May advance, the price index for U.S. exports declined 6.0 percent over the past 12 months. Agricultural Exports: The price index for agricultural exports declined 0.5 percent in May following a 3.1- percent drop in April. In May, lower prices for corn, dairy products, and soybeans more than offset higher prices for meat, vegetables, and cotton. Agricultural export prices fell 3.5 percent over the past year driven by lower prices for corn, vegetables, cotton, nuts, and dairy products.

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

The biggest mover of import and export prices is 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.