Summary
Earlier today, the Labor Department reported that import prices rose a seemingly modest 0.2% during November, versus a revised increase of 1.6% in October. Nevertheless, a closer look at the numbers indicates that despite November's more subdued advance in prices, inflationary pressures from this source persist.
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According to today's release from the Labor Department, import prices registered a 0.2% increase during November,
which compares with a revised 1.6% rise during October. (The October change originally had been reported as +1.5%.)
Based on today's report, the price of petroleum imports declined a relatively sharp 2.6% in November, compared with October's spike of 11.6%. (Petroleum prices for October originally were reported at +11.5.%).
However, the disquieting portion of November's report came not from the petroleum-related area, it came from elsewhere. November prices for non-petroleum imports rose a strong 0.7%, versus an October decline of 0.1%. The November increase was the largest since January, resulting in a year-over-year rise in this sector of 3.4%. In turn, this was the largest 12-month gain since September of 1995!
As of November, overall import prices were up 9.5% from a year earlier, versus a year-over-year increase of 9.9% for the 12 months ended October. For the three months ended November, prices were up at a 9.6% annual rate, compared with a 15.3% rate for the three months ended October.
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 produces less and less of it domestically. And this rising level of imports has been against the backdrop of a falling exchange-rate value for the dollar, on balance, over the last couple years, give or take. Predictably, this parallels 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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November 9.5% 2.3% 2.5% -8.8% 4.7%
October 9.9% 0.8% 1.9% -7.4% 5.4%
September 8.2% 0.7% -0.4% -5.6% 6.1%
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3-Mo. Avg. 9.2% 1.3% 1.3% -7.3% 5.4%
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August 7.1% 2.0% -1.3% -4.4% 5.9%
July 5.6% 2.3% -1.7% -4.1% 6.8%
June 5.7% 2.2% -3.6% -2.6% 7.9%
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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11-Mo. Avg. 5.6% 3.0% -3.0% -3.0% 6.8%
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