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 2/15/08 For Jan 2008 | |||||||||||||||||||||||
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Highlights
The import price index shot up 1.7 percent in January, pushing the year-on-year rate to 13.7 percent -- the largest increase in 25 years of data. The year-on-year rate first pushed into double digits back in November. When excluding oil, however, the news is less alarming with the month-to-month gain at 0.6 percent for a 3.6 percent year-on-year rate. The 3.6 percent rate doesn't look so bad but it's the highest since the mid-90s and is clear evidence that the nation is importing inflation.
Petroleum import prices jumped 5.5 percent in the month for a nasty 67 percent year-on-year rise. Import prices for food continue to show increasing pressure, up 3.1 percent in the month and partly reflecting demand for biofuels, another factor related to energy. Import prices for consumer goods showed an on-trend 0.3 percent monthly rise. By country, import prices from Latin America, the EU, and China showed the most pressure with import prices from Canada and Japan mild in the month.
On the export side, prices rose 1.2 percent in the month for a year-on-year gain of 6.7 percent. The gain is swollen by agricultural products which are up 29 percent year-on-year. Excluding agriculture, export prices are still up a sizable 4.8 percent in a reflection of price increases for oil-based products. Export prices for consumer goods and capital goods remain flat.
Today's news is a real headache for policy makers at the Federal Reserve who are clearly facing rising, not easing, inflation pressures. Today's data will raise concern over the approaching CPI and PPI reports.
Import prices were steady at no change in December but following a strong 3.3 percent jump in November. December's softness was in petroleum prices which dipped 0.6 percent while nonpetroleum prices increased 0.3 percent. With oil prices coming off recent historical highs, we may see a similar pattern in January. The weaker dollar is keeping upward pressure on nonpetroleum prices as is strong demand overseas for commodities.
Import prices Consensus Forecast for January 08: +0.5 percent
Range: 0.0 to +0.9 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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