Oil Prices Leave High-Side Readings on Import and Export Prices

Import prices rose 0.3% in January, accenting the upward drift that began last year (an average monthly increase of 0.2% in 2024). The increase in prices in the past 13 months has not been alarming in an absolute sense, but the advance has ended the cooling seen from mid-2022 through 2023, leaving the level of prices well above pre-pandemic observations. The chart on the left, which plots the level of the index (view it as the price of a basket of imported goods), shows the partial offset to the surge during the pandemic.

The January increase of 0.3 percent was less troubling than it might appear at first glance. The increase was led by petroleum prices, which often move erratically. Prices of nonpetroleum products rose only marginally (0.1%). The modest increase outside of petroleum reflected a marked retreat in the prices of automobiles (-0.4%, which represented the third consecutive monthly decline). Prices of consumer goods also were contained (off 0.2% after no change in the prior two months).

The soft performances in the prices of imported autos and consumer goods perhaps signaled that inflation pressure from imports will not get out of hand. As shown on the right chart, prices of nonpetroleum imports rose at an annual rate of only 0.9% in January; the 12-month increase totaled only 1.8%. One might wonder about the effect of tariffs on import prices. The series in this monthly report will not be affected, as prices are recorded before goods proceed through customs, where tariffs are imposed. Conceivably, this series could soften because of Tariffs. If foreign producers were to decide to absorb the burden of the tariff, they could achieve this outcome by lowering the prices of their products, which would leave the US retail price (price plus tariff) little changed.

Export prices jumped 1.3% in January, the sharpest advance since the inflation burst during the pandemic. However, the change was narrowly based, fueled largely by an increase of 3.4% in industrial supplies and materials, most likely influenced by petroleum products. Results elsewhere were mixed, with prices of capital goods and consumer goods rising moderately, and prices of automobiles declining slightly.

In terms of long-term trends, the chart on the left (which plots the level of the index), shows that export prices have changed little since the post-pandemic cooling. The chart on the right (which plots the percent change in prices or inflation) shows that the post-pandemic reduction in prices is no longer a factor in annual inflation. The monthly ups and downs of the past year or so have left an annual inflation rate of 2.7 percent.

Each of these monthly trade price numbers are not seasonally adjusted. The import and export price series can be found in Haver’s USECON database. Detailed figures are available in the USINT database. The expectations figure from the Action Economics Forecast Survey is in the AS1REPNA database.