Import prices drop, but are expected to pick up over the next year

Import prices fell 0.3% in September, a slightly larger decline than forecasts. Both nonpetroleum and nonfuel import prices rose 0.3% in September. Over the last year, nonpetroleum import prices have risen by 2.9% (unchanged from August), while nonfuel import prices have posted a 2.6% increase on the same basis (versus 2.7% in the prior month).
Although year-over-year import price increases continued to decelerate in September, import prices will likey start to pick up for several reasons.  
  1. The dollar has fallen sharply since September in anticipation of further quantitative easing in November.
  2. Oil prices have been picking up (WTI is now close to $83 per barrel versus $77 a month ago). 
  3. Food price inflation continues to gain ground in the grains market (for example, corn is now at $583 per bushel versus $483 a month ago).
The combination of all three of those prospects can only mean one thing.  Import price increases.  Import prices increases mean increasing inflation. 


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