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 4/11/08 For Mar 2008 | |||||||||||||||||||||||
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Highlights
The U.S. is paying more for foreign goods, the most important effect so far of the weak dollar. The import price index surged 2.8 percent in March pushing the year-on-year rate to 14.8 percent and its worst level in more than 25 years of data. The pressure is deep and widespread with non-petroleum import prices up a record 1.1 percent. The year-on-year rate for the category is +5.4 percent, still in the single digits but extending a rising trend and the worst reading since the mid 90s. Petroleum import prices jumped 9.1 percent in the month, more than reversing a 1.9 percent decline in February -- a bad sign for next week's CPI report as the February CPI was muted because of what unfortunately may prove to be a one-month respite in the price of energy.
For exporters, the weak dollar is a big plus that gives them a margin to raise prices as customers are paying less in terms of their own currency. Export prices rose 1.5 percent in the month for a 7.9 percent year-on-year increase. U.S. industrial manufacturers, benefiting from energy cost pass through and from the global infrastructure boom, have been enjoying double-digit to high single digit year-on-year export price gains since late 2004. Export prices for industrial supplies rose 3.8 percent in the month for a 13.8 percent year-on-year increase. But export prices for agriculture products show some of the greatest change of any category in the report with year-on-year rates, first hitting the double digits in late 2006, now over +30 percent at a record 33.4 percent.
Reaction to this report is always surprisingly light, including this morning with financial markets holding still. But the results certainly do raise the question whether the weak dollar is excessively feeding inflation pressures.
Import prices were favorable in February but continued weakness in the dollar and elevated oil and commodity prices put that one month improvement at risk. Import prices rose 0.2 percent in February, following a 1.6 percent spike the month before. 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.
Import prices Consensus Forecast for March 08: +1.8 percent
Range: +0.5 to +2.4 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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