US Resumes Importing Inflation, Exporting Deflation, As Annual Import Prices Increase Highest Since August 2008

Tyler Durden's picture

So much for the end of inflation importing. After dropping by the most in 2011, or 0.6% in June, import prices once again increased firmly, rising by 0.3% in July, on expectations of a -0.1% decline. So much for that commodity drop "cooling" with fuel imports increasing 0.4%, and non-fuel imports up 0.2%. The take home: "Import prices rose 14.0 percent for the year ended in July, the largest 12-month advance since the index increased 18.1 percent for the year ended in August 2008." The picture is far uglier on the export side, where prices posted the first drop since July 2010. "The downturn was led by a decline in the price index for agricultural commodities, which was partially offset by an advance in  nonagricultural prices. Export prices rose 9.8 percent over the past 12 months, down from the 10.1 percent change for the year ended in June, which was the largest year-over-year increase in export prices since a 10.2 percent advance between July 2007 and July 2008." In other words: the US is now importing inflation and exporting deflation. What does that mean if you are a chairman of the Fed reserve? Why, that you want to return the favor of course, and as soon as possible at that, as this implies ongoing GDP contraction due to terms of trade.

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Import Prices

 

Nonfuel Industrial Supplies and Materials: The price index for industrial supplies and materials excluding fuels increased 0.7 percent in July following a 0.4 percent decrease in June. Higher prices for fertilizers and other chemicals were the largest contributors to the increase. Over the past 12 months, the index rose 16.3 percent.        

 

Finished Goods: Finished goods prices were mixed in July. Prices for consumer goods increased 0.4 percent, automotive vehicle prices fell 0.3 percent, and the price index for capital goods remained unchanged. Higher prices for cotton apparel and diamonds, which increased 1.8 percent and 4.2 percent, respectively, drove the advance in the price index for consumer goods. Falling prices for transport vehicles, down 4.5 percent in July, led the decline in the price index for automotive vehicles.        

 

Foods, Feeds, and Beverages: Foods, feeds, and beverages prices increased 0.5 percent in July following a 1.7 percent decline in June. The increase was driven by rising prices for fish and shellfish and green coffee, which increased 2.0 percent and 2.9 percent, respectively. 

 

Imports by Locality of Origin: The price index for imports from China advanced 0.4 percent in July following a 0.2 percent increase in June. Over the past year, import prices from China have increased 3.5 percent, the largest 12-month advance since the index rose 4.3 percent for the year ended October 2008.  In contrast, import prices from Japan fell 0.3 percent, the largest decline since a 0.6 percent decrease in September 2008.  

 

Transportation Services: Import air passenger fares edged down 0.1 percent in July. A 5.0 percent decline in European air fares was partially offset by a 6.1 percent gain in Latin America/Caribbean air fares.  Import air freight prices fell 0.2 percent in July.    

 

Export Prices

 

Nonagricultural Industrial Supplies and Materials: Nonagricultural industrial supplies and materials prices fell 0.2 percent in July, following a 0.6 percent downturn in June. A 10.2 percent drop in prices for steelmaking materials led to the overall decrease; a 2.3 percent decline in plastic prices was also a contributing factor.     

 

Finished Goods: The price indexes for consumer goods and for automotive vehicles both increased in July. The 0.6 percent increase in consumer goods was highlighted by rising prices for medicinal, dental, and pharmaceutical materials, which increased 0.6 percent. Automotive vehicle prices rose 0.5 percent in July, led by a 0.7 percent increase in parts prices. Capital goods prices were unchanged in July.             

 

Transportation Services: The index for export air passenger fares advanced 8.1 percent in July, driven by an 11.3 percent increase in European fares and an 8.8 percent increase in Asian fares. Over the past 12 months, the index for export air passenger fares rose 8.6 percent. Export air freight prices fell 0.8 percent in July after edging down 0.1 percent in June.

As for the housing starts and building permits which also came in earlier about in line with expectations, it was nothing but floor hugging noise so is completely irrelevant.