Thursday, December 14, 2006

Import Prices Up .2%

From the BLS

Import prices rose 0.2 percent in November following the petroleum driven declines of 2.3 percent and 2.2 percent in October and September, respectively. The index for overall imports increased 1.2 percent over the past 12 months. Petroleum prices fell a more modest 1.6 percent in November compared to the double-digit declines recorded in the prior two months. Despite the recent downturn, petroleum prices advanced 1.5 percent for the year ended in November. Nonpetroleum prices resumed an upward trend in November, following a 0.5 percent decline in October, rising 0.7 percent for the month and 1.3 percent over the past year.

Oil is obviously the most variable part of this number. Oil decreased 10.9% in September, 10.1% in October and 1.6% last month. This decrease is the primary reason for the decrease in import prices over the last few months.

Oil is the central problem with oil prices. I've said it before, and frankly I'll keep saying it probably for the rest of my life. So long as the US is a major oil importer, we are one geo-political crisis away from major problems.

The .2% increase should help to calm any fears of a Fed raising. However, the .7% rise ex-oil may lead to a different conclusion. However, total imports are about 13% of the US economy. In other words, this is a number to keep you eyes on, but don't overstate its importance.

Gold Star For Redfish. From Bloomberg:

Import prices rose 0.2 percent after falling more than 2 percent in each of the two prior months, the Labor Department said today in Washington. Excluding petroleum, the index rose 0.7 percent following a 0.5 percent decline the prior month.

Prices of natural gas, which is in the non-petroleum category, soared 30.3 percent, the biggest increase since November 2004. A weaker dollar also boosted the tab on imports. The Federal Reserve this week kept its benchmark rate unchanged for a fourth consecutive policy meeting and said ``inflation risks'' remained.

``The recent sharp drop in the dollar suggests some upside risk to trade prices through year-end and into early 2007,'' Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado, said before the report.