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 3/13/08 For Feb 2008 | |||||||||||||||||||||||
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Highlights
Import prices rose 0.2 percent in February, one of the only tame readings in an otherwise inflationary report. Year-on-year, import prices are up 13.6 percent, right at January's rate for the worst readings in more than 25 years of data. A month-to-month downswing in petroleum held back February's month-to-month reading which for non-petroleum shows a steep 0.6 percent rise which follows a 0.7 percent rise in January.
Even prices on the export side are going up, good for U.S. agriculture which is enjoying a boom right now but bad for overall inflation pressures and inflationary expectations which more and more are shifting toward food. Export prices jumped 0.9 percent in February following a 1.2 percent jump in January. Year-on-year, export prices are up 6.8 percent. A look at just agriculture shows export prices up 4.4 percent in February for a 30.8 percent year-on-year increase. No wonder domestic agriculture is strong!
Today's report is yet another negative for the economic outlook, indicating that the falling dollar is in fact leading to higher prices at home. The report raises the chances of less-than-moderate readings for tomorrow's CPI report and next Tuesday's PPI report.
Import prices are heating up due to not just higher oil prices but also to overall commodity prices and the lower dollar. Recent Fedspeak has the Fed hoping that a depreciating dollar will not notably impact U.S. inflation but recent import price data suggest otherwise. 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. Excluding oil the gain in January was 0.6 percent for a 3.6 percent year-on-year rate. The 3.6 percent rate is the highest since the mid-1990s and is clear evidence that the nation is importing inflation. With oil and other commodity prices continuing to surge, expect another nasty import price figure for March.
Import prices Consensus Forecast for March 08: +0.6 percent
Range: -0.5 to +1.4 percent
![[Chart]](chart.gif)
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Yearly changes in import and export prices reveal long term trends in inflation for tradable goods. |
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