Summary
Earlier today, the Labor Department reported that import prices fell 1.3% during December, led by a 11.5% decline in petroleum. When you sift through the numbers further, however, the news becomes less positive.
_____
According to today's release from the Labor Department, import prices registered a drop of 1.3% during December,
which compares with a revised 0.2% decline during November. (The November change originally had been reported as +0.2%.)
Based on today's release, the price of petroleum imports declined a very steep 11.5% in December, which followed a revised decline of 5.7% in November. (The November change originally was reported as minus 2.6%.)
The disquieting portion of today's report came from the non-petroleum area. December prices for imports excluding the petroleum component rose a strong 0.5%, versus a November increase of an even stronger 0.9% (reported originally as +0.7%).
The December increase resulted in a year-over-year rise in this sector of 3.8%. This was the largest 12-month gain since August of 1995, keeping intact the upward year-over-year drift in evidence over recent months. As of December 2003, import prices, excluding petroleum, were up only 1.2% from a year earlier.
As of December 2004, overall import prices were up 6.9% from a year earlier, versus a year-over-year gain of 9.1% for the 12 months ended November. However, as of December 2003, the 12-month change was a substantially lower 2.4%.
There is certainly nothing I see in today's report that would dissuade the Federal Reserve from raising interest rates some more.
-----------------------------------------------------
U.S. IMPORT PRICES - % CHANGE
(3-Mo.= Three-month Compound Annual Rate)
-----------------------------------------------------
All Imports, Petroleum
All Imports Excl. Petrol. Imports Only
Month/ -------------- -------------- ---------------
Year Mo. 3-Mo. Y/Y Mo. 3-Mo. Y/Y Mo. 3-Mo. Y/Y
-----------------------------------------------------
12/04 -1.3 0.4 6.9 0.5 5.3 3.8 -11.5 -25.3 30.8
11/04 -0.2 7.9 9.1 0.9 3.6 3.6 -5.7 38.7 55.3
10/04 1.6 15.3 9.9 -0.1 1.2 2.9 11.3 145.5 68.1
09/04 0.5 9.8 8.2 0.1 1.6 2.9 3.3 75.1 53.5
08/04 1.5 6.8 7.1 0.3 1.6 3.1 8.8 46.7 39.9
07/04 0.4 6.9 5.6 0.0 1.2 2.5 2.3 50.0 30.9
06/04 -0.2 6.1 5.7 0.1 2.4 2.5 -1.1 36.0 34.5
=====================================================
12/03 0.7 5.5 2.4 0.3 1.7 1.2 5.1 41.4 12.8
-----------------------------------------------------
| 