Import Prices, Trade Deficit
This latest report from RDQ supports our thoughts that significantly higher inflation is on the Horizon. If import prices are rising, the value of a buck is going down. We must put Quantitative Easing at the root of the problem, i.e. Ben Bernanke et al.
IMPORT PRICESSource RDQ
BOTTOM LINE: Total import prices have risen at a double-digit year-over-year pace and core import prices have picked up sharply since the summer of 2009. There is no sign of deflationary pressures here. However, the Fed will continue to focus on slack as the principle driver of inflation and these data are unlikely to be of much concern to policymakers.
- Import prices rose 0.7% in March, a moderately smaller increase than consensus forecasts. Over the last 12 months, total import prices have risen 11.4%.
- Although nonpetroleum import prices fell 0.2% in March, nonfuel import prices increased 0.2%. However, over the last year, nonpetroleum import prices have risen by 2.8% (versus 2.1% in February), while nonfuel import prices have posted a 2.7% increase on the same basis.
BOTTOM LINE: From a GDP accounting perspective, the January and February trade data point to trade being a modest drag on real GDP growth in the first quarter (only partially offsetting the addition to GDP growth from inventories). Also, as a sign of improved domestic business demand, real imports of industrial supplies and capital goods have risen sharply over the last three months. On a year-over-year basis, export growth to most major regions remained robust in February, indicating continued recovery in global trade.
- The trade deficit widened by more than expected, to $39.7 billion in February from $37.0 billion in January. Imports rose 1.7% in the month (in nominal terms), while exports edged 0.2% higher.