Import And Export Price Year-over-Year Deflation Continues In January 2016

Trade prices continue to deflate year-over-year, and energy prices again drove this month’s decline.

Import Oil prices were down 12.4 % month-over-month, and export agricultural prices decreased 1.1 %.

There is only 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 strengthening of the dollar relative to other currencies.

According to the press release:

All Imports: The price index for overall imports fell 1.1 percent in January, the largest monthly decrease for the index since a 1.8-percent drop in August 2015. Both fuel and nonfuel prices continued to trend down. Import prices fell 6.2 percent over the past year. Despite declining in January, the 12-month drop in import prices was the smallest over-the-year decrease since the index fell 5.6 percent between December 2013 and December 2014.

All Exports: Prices for U.S. exports fell 0.8 percent in January and have not recorded a monthly advance since the index rose 0.5 percent in May 2015. In January, declining prices for both agricultural exports and nonagricultural exports contributed to the overall drop. The price index for overall exports fell 5.7 percent for the year ended in January.