Import And Export Prices Fall

Significant declines sweep nearly all categories of the import & export price report pointing squarely to a deepening of cross-border deflationary pressures. Import prices fell 1.8 percent in August, slightly more than expected, while export prices fell 1.4 percent which is substantially more than expected. Petroleum pulled down the import side but even when excluding petroleum prices fell 0.4 percent. Export prices were hit by lower prices for industrial supplies, foods-feeds-beverages, and also agricultural products. And finished goods, whether on the import or export side, show a run of minus signs for both the monthly readings and the year-on-year readings. Year-on-year rates are severe, at minus 11.4 percent for imports and minus 7.0 percent for exports. This report highlights the risk of deflation which is a major argument on the side of the doves at next week's FOMC meeting.

Recent History Of This Indicator: The drop in oil and commodity prices is expected to pull down import & export prices more steeply than usual, to minus 1.6% from minus 0.9% for import prices and to minus 0.4 percent from minus 0.2% for export prices. Prices in this report have been deep in the minus column, the result of both weak oil and weak commodity prices but also global weakness in final demand.