Indexes are compiled for the prices of goods that are bought in the United States but produced abroad and the prices of goods sold abroad but produced domestically. These prices indicate inflationary trends in internationally traded products. Why Investors Care
| Released on 1/11/08 For Dec 2007 | |||||||||||||||||||||||
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Highlights
Import price inflation took a pause in December, unchanged in the month but for a still very hot year-on-year rate of 10.9 percent. Year-on-year rates of increase hit the double digits in October reflecting high energy prices but also high prices of foreign goods in general. But excluding petroleum, import prices rose a noticeable 0.3 percent for a year-on-year rate of 2.9 percent, still contained but definitely on the high end of trend. The ex-petroleum year-on-year will be closely watched with further gains in future months signaling wider inflation trouble for the U.S. economy.
Export prices rose 0.4 percent in December with the year-on-year rate at 6.0 percent. Agricultural exports are showing heavy price pressure, at a nearly 25 percent year-on-year rate and reflecting strong demand for grains tied in part to ethanol production.
Back to import prices, foods, feeds & beverages at a year-on-year rate of 9.3 percent is the hottest price sector outside of energy. Capital goods import prices are up a scant 0.8 percent on the year with consumer goods at 1.6 percent and within this category motor vehicle also at 1.6 percent.
Prices of finished goods in future months will turn on the balance between high energy-related costs on the input side against easing demand on the output side. Today's data, though showing pressure on the ex-petroleum import side and specifically food, will ease concern over the approaching PPI and CPI releases. Financial markets showed little reaction to the report.
Import prices surged 2.7 percent in November for a year-on-year rise of 11.4 percent. The monthly increase was the largest in 17 years. Most of the spike came from oil and natural gas prices. Import prices excluding petroleum also rose sharply, up 0.7 percent in the month for a 3.0 percent year-on-year increase. We are likely to see more of the same for December, given recent gains in oil prices and downward trend in the dollar.
Import prices Consensus Forecast for December 07: 0.0 percent (flat)
Range: -0.8 to +1.5 percent
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Yearly changes in import and export prices reveal long term trends in inflation for tradable goods. |
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