Year-over-year  import prices deflated again this month, whilst export prices also deflated. Both oil price indices and food declined this month, there were a lot of negative numbers in all sections of imports and exports.

• with import prices down 1.3% month-over-month, down 1.8% year-over-year;
• and export prices down 1.0% month-over-month, down 0.8% year-over-year..
• the markets were expecting:

There is only marginal correlation between economic activity, recessions and export / import prices. Prices can be rising or falling going into a recession or entering a period of expansion. Econintersect follows this data series to adjust economic activity for the effects of inflation where there are clear relationships.

Econintersect follows this series to adjust data for inflation.

Year-over-Year Change – Import Prices (blue line) and Export Prices (red line)

There are three cases of deflation outside of a recession – early 1990′s, late 1990′s, and mid 2000′s. Import price deflation is normally associated with strengthening of the dollar relative to other currencies.

According to the press release:

All Imports: Import prices fell 1.3 percent in October, after decreasing 1.6 percent over the previous 3 months. The October decline was the largest monthly drop since a 2.3-percent decrease in June 2012. In October, the drop was led by lower fuel prices, although nonfuel prices fell as well. The price index for overall imports declined 1.8 percent over the past 12 months, the largest year-over-year drop since a 1.8- percent decrease in November 2013.

All Exports: Overall export prices declined 1.0 percent in October. Other than a 1.0-percent decrease in April, that was the largest 1-month drop for the index since a 1.7-percent decline in June 2012. In October lower prices for agricultural exports and nonagricultural exports drove the decrease. Export prices also fell for the year ended in October, declining 0.8 percent, the largest 12-month drop since a 1.0-percent decrease between February 2013 and February 2014.

How moderate the price increases have been over the past year is obvious from the graphic below.

Month-over-Month Change – Import Prices (blue line) and Export Prices (red line)

The biggest mover of import and export prices are oil (imports) and agricultural products (exports).

Oil Import Price Change Month-over-Month (blue line) and Agriculture Export Change Month-over-Month (red line)

Export / Import prices are the first inflation numbers reported each month.

Caveats on the Use of the Export / Import Price Index

Both import and export prices index values shown in this post is a weighted average for the the entire category of exports or imports. The BLS has many sub-categories relating to a particular commodity or goods. Econintersect using spot checks believes these subindexes are accurate.