Join        Login             Stock Quote

The End of a Trend? The Export and Import Price Release in Context

 May 29, 2008 09:56 AM

The BLS's Import/Export price release, from May 13th, might seem like old news. And some aspects are. But I think it is useful to think about what the trends in these price indices mean for general inflation and the adjustment process (this is in some sense an update on this post).

First, consider import prices.
Figure 1: Log dollar exchange rate (up is weaker) against broad basket of currencies (blue), log goods import price (red), log goods import ex-oil price (green), all normalized to 2002M02=0. Source: Federal Reserve Board via St. Louis Fed FREDII, BLS Export/Import price release (May 13), and author's calculations.

[Related -Death Cross More Of A Buy Signal?]

Note that while total goods import prices (including commodities such as oil) have surged nearly 40% since 2002M02 -- a remarkable 9/10 of the 45% depreciation of the broad trade weighted dollar over the corresponding period -- the non-oil goods import price has only moved by a third of the dollar's change. (This is why measured United States exchange rate pass-through is higher for prices including dollar-denominated commodities (1), (2)).

[Related -Key Price Planning Levels Updated for Chipotle]

What does this mean? In particular, will these import price changes feed into a generalized change in the CPI? In a mechanical sense, they must since imported goods comprise some portion of the CPI. However, in an economic sense, they might not, to the extent that non-import prices fall.

Note that export prices have also risen. Figure 2 depicts the corresponding picture. Both the goods export and goods export ex-agriculture price indices have risen, accounting for between 4/5 and a half of the dollar's depreciation. And while it is typical to focus on import prices as the key driver of domestic inflation, it is important to understand that as long as goods used in domestic consumption and exportables are to some degree substitutable, then rising export prices can also exert upward pressure on inflation.

Next Page >>123
iOnTheMarket Premium


Comments Closed

rss feed

Latest Stories

article imageEmerging-Markets Stocks Took The Lead Last Week

Emerging-markets equities enjoyed a solid rise last week among the major asset classes, based on a set of read on...

article imageDoes Your Latest Investment Pass This Test?

On Wednesday, I sounded the alarm about the problems looming for some consumer staples stocks. In short, read on...

article imageIs The Slump In US Manufacturing Easing?

Yesterday’s November survey data from the Philadelphia Fed hints at the possibility that a stronger trend read on...

article imageMarket Potentially Facing Near Term Technical Headwinds

After the S&P 500 Index pullback on Thursday and Friday last week, the market's advance on Monday and read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.