Import/Export Prices See Limited Contraction In September

A bounce back for petroleum prices helped to limit import-price contraction in September, coming in at only minus 0.1 percent. But contraction in export prices, where agriculture and not petroleum is the wild card, was very heavy, at minus 0.7 percent in the month. Year-on-year rates are very weak, still in the double-digits for imports at minus 10.7 percent and at minus 7.4 percent for exports.

A striking detail on the import side is slightly deepening year-on-year contraction in various core readings, still in the low to mid single digits with non-petroleum down 3.3 percent. This is the largest decline since October 2009 and points to fundamental price weakness for imports, in part a function of the strong currency which is giving U.S. buyers more for their dollars. Prices for petroleum imports rose 1.1 percent in the month, a welcome positive for the Fed's efforts to raise inflation but still a fraction of the giant 11.8 and 6.6 percent declines of the prior two months.

On the export side, prices of agricultural goods fell 1.1 percent and are down a stiff 13.5 percent year-on-year in news that is not welcome in the farm sector. Non-agricultural export prices fell 0.6 percent in the month with the year-on-year rate also speaking to fundamental price weakness, at minus 6.7 percent in what is record weakness.

But the price bounce for petroleum is a reminder that the great price drag from this year's oil rout may have run its course, especially given this month's early strength in oil prices. Still, this is a weak report that underscores the strong dollar's negative-price effects on imports.

Recent History Of This Indicator:
Import & export prices have been signaling deepening rates of cross-border price contraction. The declines have swept nearly all readings in this report through much of the year. Easing declines, but declines nevertheless, are forecast for September.