Your Economic Cheat Sheet to August Import and Export Prices

Today’s Import and Export Price Index, while not market moving, showed that the US still has some residual inflation to import (Prices of goods imported from China rose by 0.1% in August, and 3.6% from a year earlier). The August headline number came at -0.4%, on expectations of a -0.8% drop (0.3% previously), driven entirely by Fuel Imports which dropped by -1.8%, following a 0.4% increase in July, and a drop of -2.3% previously. In other words, the Fuel component of importer prices follows the Russell 2000 (NYSE:IWM) with a correlation of 1.000.

As for non-fuel imports, these was positive as has been the case for 12 months in a row with the exception of June 2011, when it was unchanged. Should QE3 be announced and priced in in one week, look for Brent, and its far less relevant cousin WTI, to soar, sending import prices to the moon once again, and so forth: we all know how the play ends.

Goldman’s take:

1. US import prices declined by 0.4% (month-over-month) in August, a smaller drop than expected by the consensus. Prices of imported oil fell by 2.1% during the month, but other commodity prices rose. The index for industrial supplies and materials excluding oil gained 1.0%. According to the BLS, this rise was led by increases in gold and other precious metals. Prices for finished imports also generally rose during the month. The index for finished consumer goods-the component most closely related to the US CPI-rose by 0.3%. Cotton-related apparel products and household goods were the major sources of the increase. Finished capital goods prices rose by 0.1%, and prices for imported vehicles were unchanged.

2. Prices of goods imported from China rose by 0.1% (mom) in August, or 3.6% from a year earlier. Import price increases were not concentrated in any particular country during the month: prices for manufactured imports from both developed and emerging market economies increased by similar amounts.

From the report:

All Imports: The price index for overall imports fell for the second time in three months in August, decreasing 0.4 percent following a 0.3 percent upturn in July and a 0.7 percent drop in June. Import prices declined 0.6 percent over the past four months after rising 13.7 percent between September 2010 and April 2011. Overall, the index increased 13.0 percent for the year ended in August, compared to a 13.8 percent advance for the July 2010-11 period.

Fuel Imports: The August drop in overall import prices was driven by a 1.8 percent decline in fuel prices. The decrease was led by a 2.1 percent drop in petroleum prices which more than offset a 3.3 percent advance in the price index for natural gas. Despite declines in three of the past four months, fuel prices rose 41.1 percent over the past year. Prices for petroleum and natural gas each increased over the past 12 months, rising 43.5 percent and 8.0 percent, respectively.

All Imports Excluding Fuel: In contrast, nonfuel prices advanced 0.2 percent for the second consecutive month in August. The price indexes for nonfuel industrial supplies and materials, consumer goods, and capital goods all increased in August, while foods, feeds, and beverages prices declined and prices for automotive vehicles remained unchanged. Nonfuel prices rose 5.3 percent for the year ended in August, primarily driven by a 17.1 percent advance in the prices for nonfuel industrial supplies and materials.

And on the export side, “Export prices resumed an upward trend in August, rising 0.5 percent following a 0.4 percent downturn in July. Higher prices for agricultural and nonagricultural exports each contributed to the overall advance in August. The price index for overall exports also increased over the past year, increasing 9.6 percent.” How long until the rest of the world resumes complaining that the US is exporting inflation yet again?

August highlights:

Import Prices

Nonfuel Industrial Supplies and Materials: Nonfuel industrial supplies and materials prices advanced 0.9 percent in August following a 0.6 percent rise in July. The August increase was led by higher prices for unfinished metals, notably a 3.2 percent increase in nonmonetary gold prices and a 5.4 percent advance in
the price index for other precious metals.

Finished Goods: Prices for finished goods were mostly up in August. Consumer goods prices rose 0.3 percent and were driven by a 1.8 percent increase in the price index for cotton apparel and household goods, which also increased 13.1 percent over the past year. Capital goods prices ticked up 0.1 percent despite a 0.4 percent drop in computer, peripheral, and semiconductor prices.

Foods, Feeds, and Beverages: Foods, feeds, and beverages prices fell 0.8 percent in August, led by a 12.9 percent drop in coffee prices. Prior to the August downturn, coffee prices had trended up since early 2010, rising 102.2 percent from March 2010 to July 2011.

Imports by Locality of Origin: The price index for imports from China ticked up 0.1 percent in August, the smallest monthly increase since the index was unchanged in September 2010. Import prices from China rose 3.6 percent over the past year, the largest 12-month advance since a 4.3 percent increase in October 2008. Import prices from Japan also rose in August, increasing 0.2 percent after a 0.2 percent drop the previous month. In contrast, the price indexes for imports from Mexico, Canada, and the European Union all decreased in August, down 0.9 percent, 0.2 percent, and 0.1 percent, respectively.

Transportation Services: The index for import air passenger fares declined 3.0 percent in August, led by a 6.6 percent drop in European fares. Despite the decline, import air passenger fares advanced 7.4 percent over the past 12 months. Import air freight prices increased 0.6 percent in August and 13.9 percent over the past year.

Export Prices

Nonagricultural Industrial Supplies and Materials: Prices for nonagricultural industrial supplies and materials rose 0.6 percent in August after edging down 0.1 percent in July. The August increase was driven by a 3.0 percent increase in nonferrous metals prices which more than offset lower fuel prices.

Finished Goods: The price indexes for consumer goods and automotive vehicles each increased in August. The 0.2 percent increase in consumer goods prices followed a 0.6 percent increase in July. Automotive vehicles prices advanced 0.4 percent in August, led by a 0.6 percent rise in passenger cars.

Transportation Services: Export air passenger fares rose 9.7 percent in August after increasing a similar 9.8 percent in July. The August advance was driven by a 24.8 percent jump in Asian fares, while increases in European, Asian, and Latin American/Caribbean fares all contributed to the increase in July. The index for export air passenger fares rose 19.4 percent for the year ended in August. Export air freight prices fell 0.6 percent in August, but increased 16.4 percent over the past 12 months.

Tyler Durden is the founder of Zero Hedge.