The Bureau of Labor Statistics (BLS) has released its indexes on import and export prices for November 2016. While some inflation has been in seen in many readings elsewhere, it seems like the strong dollar is capping the prices for what Americans are importing from abroad.
U.S. import prices fell by 0.3% in November, which is far lower than hoped for, considering that there was a 0.4% gain in October. The BLS showed that the drop in November was primarily led by decreasing fuel prices. Prices of imported petroleum fell 4.7% in November, after a 7.3% rise in October.
U.S. export prices also declined in November, but by a lower amount than imports. Export prices were down 0.1%, versus a gain of 0.2% in October. Agricultural prices rose 0.6% in the exports category, but the year over year reading was down 1.2%.
The annual changes were not very inflationary either. Import prices compared with November of 2015 were down 0.1%, and export prices were down by 0.3%.
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On fuel imports, the BLS said:
Fuel prices declined 3.9 percent in November, the largest monthly drop in the index since a 6.8-percent decrease in February. In November, a 4.7-percent decline in petroleum prices more than offset a 10.6-percent advance in natural gas prices. Natural gas prices increased 68.4 percent over the past 5 months. Import fuel prices advanced 2.7 percent for the year ended in November; a 2.4-percent increase in petroleum prices and a 13.6-percent rise in natural gas prices each contributed to the overall increase in fuel prices.
What matters for the broader economy is how this ties in with inflationary pressures. The FOMC needs inflation up at or close to a 2.0% to 2.5% range to give stronger cover for rate hikes. This isn’t supporting that, but a Fed rate hike still seems imminent for Wednesday, even if there is not another rate hike being priced in until mid-2017.
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