Deflationary Tailwinds In US Import/Export Prices by by Eric Bush, CFA, Gavekal Capital Blog
A strong dollar is very prevalent in today’s import and export price release. Import prices have declined by -11.4% year-over-year which is the largest decline since 9/2009. If we go back as far as the data exists (1983),the current decline is the largest on record outside of the financial crisis. Excluding fuels, import prices have declined by just over 3% which again is the largest decline since 10/2009. The decline in import prices looks like it has a ways to run as well. The dollar has gained over 16% over the past year. The last time it was this strong was in 2009. Import prices excluding petroleum products eventually declined at a rate of -7.27% in July 2009. Currently, import prices excluding petroleum products is down- 3.2% YoY.
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There is certainly a deflationary tailwind in both imported and exported consumer goods excluding autos. Imported consumer goods ex-auto prices have declined at a -1.2% YoY rate. This is a largest year-over-year decline than we even saw in 2009 and is at a pace that was hit just a couple of times in 1998 and 2002.
Export prices of consumer goods ex-autos is in a free fall. Going back to 1984, export prices in this category have never declined at the pace it is currently declining at. Year-over-year, export prices of consumer goods ex-autos is down -2.86%.