Import Prices Post Third Straight Monthly Decline

Cross-border inflationary pressures remain dormant including import prices which fell 0.5 percent in September for the third straight decline. Year-on-year, import prices are deep into the deflationary zone at minus 0.9 percent. The drop in imported petroleum prices, down 2.0 percent in the month and down 6.6 percent year-on-year, is a key factor in the import-price decline, but even when excluding petroleum, import prices fell 0.2 percent in the month. Year-on-year, the ex-petroleum reading is in the plus column but not by much, at plus 0.7 percent.

Export prices fell 0.2 percent for a second straight monthly decline and are also down 0.2 percent year-on-year. Here, agricultural prices are a key factor, down 0.9 percent in the month and down 2.9 percent year-on-year. When excluding agriculture, export prices also fell 0.2 percent on the month and are unchanged year-on-year.

Prices of finished goods, whether on the import or export side, remain extremely flat with exported capital goods showing the only increase in the month, at only plus 0.1 percent, and with exported consumer goods excluding autos showing the deepest decrease at minus 0.2 percent. Year-on-year, prices of imported consumer goods excluding autos show the greatest increase, at plus 0.9 percent, and with imported motor vehicles showing the greatest decrease at minus 0.7 percent.

Strength in the dollar is containing import-price inflation which, according to Wednesday's FOMC minutes, has the doves at the Federal Reserve concerned that inflation will remain below the 2 percent policy target. The price of oil, where the decline is accelerating sharply this month, is another negative factor for the inflationary outlook. Today's report will increase deflationary concerns and points to another month of soft readings for next Wednesday's producer price report and the consumer price report which will be released the following Wednesday.

Recent History Of This Indicator:
Import prices fell 0.9 percent in August but were skewed by a 4.4 percent fall in petroleum products. Excluding petroleum, import prices edged 0.1 percent lower. The year-on-year rate, which had been edging higher in recent months, is back in the negative column at minus 0.4 percent. But here again excluding petroleum, the year-on-year is in the plus column at 0.8 percent. Export prices fell 0.5 percent in the month for a year-on-year rate of plus 0.4 percent. Excluding agricultural products, prices fell 0.3 percent for a year-on-year rate of plus 0.5 percent.