Summary
Earlier today, the Labor Department reported that import prices rose 1.7% during August, indicating that inflationary pressures from this source continue.
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According to today's release from the Labor Department, import prices recorded a sharp 1.7% increase during August, versus a revised 0.3% increase during July. (The July change originally had been reported as 0.2%.)
Based on today's report, the price of petroleum imports rose 9.6 in August (compared with a revised 2.0% gain in July), and the price of non-petroleum imports was up 0.4% (versus a 0.0% change in July -- no revision from the original release).
As of August, import prices were up 7.2% year over year, versus an increase of 5.5% for the 12 months ended July. Over the three months ended August, prices were up at a 7.3% annual rate, which compares with a 6.5% rate for the three months ended July.
A regular admonition of ours for years now has been that inflation data coming out of the Labor Department reflect the fruits of a major effort during the 1990s to understate the numbers. So if you can use government numbers to disprove the government's contention that there is no inflation, it's all to the good.
The following table is a way of illustrating how the United States has been importing a rising level of inflation from abroad, a sensible outcome when contemplated in commonsense terms. Since the US is a nation that imports more and more of what it consumes, it therefore makes less and less of it domestically. And this rising consumption has been against the backdrop of a falling exchange-rate value for the dollar, on balance, over the last couple years, give or take. This just happens to parallel the swing in import prices over roughly the same period.
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U.S. IMPORT PRICES
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12-Month Change as of
Month of Year Shown
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Month 2004 2003 2002 2001 2000
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August 7.2% 2.0% -1.3% -4.4% 5.9%
July 5.5% 2.3% -1.7% -4.1% 6.8%
June 5.7% 2.2% -3.6% -2.6% 7.9%
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3-Mo. Avg. 6.1% 2.2% -2.2% -3.7% 6.9%
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May 6.9% 1.0% -3.7% -0.8% 6.1%
April 4.6% 1.8% -3.6% -0.7% 6.6%
March 1.1% 6.8% -5.6% -1.6% 9.2%
February 0.9% 7.5% -8.3% +0.2% 9.3%
January 2.2% 5.8% -8.9% +2.8% 7.1%
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8-Mo. Avg. 4.3% 3.7% -4.6% -1.4% 7.4%
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