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 9/11/08 For Aug 2008 | |||||||||||||||||||||||
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Highlights
Import prices, as well as export prices, fell back steeply in August in what, next only to $100 oil, is the best news yet on the price front. Import prices fell 3.7 percent in August, the largest single drop in 20 years. This index had posted eight straight monthly gains and mostly very severe gains as high as 3 percent. The year-on-year rate, now at +16 percent, peaked last month at a record +21.7 percent. Excluding a giant 12.8 percent plunge in petroleum, import prices fell 0.3 percent to end a long streak of 10 monthly gains. The year-on-year rate is still very high at +7.5 percent.
The easing in pressure spread to the export side where prices fell for the first time in nearly two years, down 1.7 percent in August. Agricultural prices led the way, down 9.6 percent but are still up 24.8 percent year-on-year. Total export prices are up 8.2 percent year-on-year, down from a rare 10 percent rate in July.
It is possible that the worst of the inflation scare is over. Oil prices are coming down and the economic pace here, in Europe, and in Japan has slowed. Pointing to easing pressure specifically on the import side is the ongoing decline in dollar, which on a trade-weighted basis jumped 2.7 percent in August for its biggest gain in 10 years. The higher the dollar is, the lower the cost of foreign goods -- an important factor in today's data. Today's report points to a similar turnaround for tomorrow's producer price report as well perhaps to easing pressure on the consumer side in Tuesday's report.
Import prices extended their run of increases in July though at a slightly less severe monthly rate of 1.7 percent, down from four prior months of increases near or above 3 percent. The year-on-year rate however continued to extend into record territory, up 21.6 percent vs. 21.1 percent in June. The easing month-on-month rate reflects less severe increases for petroleum imports, up 4.0 percent vs. four straight months of high single digit readings. Excluding petroleum, import prices rose a monthly 0.9 percent in July. For August we may actually see a decline in the overall index due to lower oil and other commodity prices. But we are also likely to see gains on the high side for consumer goods and capital equipment as the recent rise in the dollar has not had time to impact prices.
Import prices Consensus Forecast for August 08: -1.7 percent
Range: -3.3 to -0.8 percent
![[Chart]](chart.gif)
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Yearly changes in import and export prices reveal long term trends in inflation for tradable goods. |
| 2008 Release Schedule | ||||||||||||||||||||||||||
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