Import, Export Prices Continue To Fall

Date: February 16, 2016

Fuel, Agriculture Prices Lead Overall Declines

The latest Labor Department statistics show that in January, the overall index for import prices fell 1.1 percent from December, the biggest monthly index decline since August 2015. The decline came from both nonfuel and fuel prices, all of which are trending lower. For the year, overall import prices fell 6.2 percent. The bulk of monthly import price declines came from import fuel prices, which fell 12.4 percent in January, their lowest decline since August 2015. Export prices also saw January declines, falling 0.8 percent from December. Export prices have fallen every month since May 2015, and were down 5.7 percent for the year. Agricultural export prices slightly outpaced overall export price declines, falling 1.1 percent in January. Agricultural export declines were led by falling nut prices, which saw a January decline of 7.8 percent. The Wall Street Journal reported that a survey of economists found that they expected import prices to decline by 1.5 percent in January, meaning the announced results were slightly better than anticipated. However, the continued decline of oil prices is fueling declines across the imports index. The Journal pointed out that for the year through January 2016, imported petroleum prices are down 35.3 percent.

What This Means For Small Businesses

As the Journal pointed to in its coverage, the Federal Reserve keeps a close eye on import and export prices when determining its rate policy. News of continued declines in import and export prices could therefore have an effect on overall policy that might trickle down to small business owners. Small Business owners haven’t had much to cheer about lately in terms of economic conditions, as reflected in the NFIB’s latest Small Business Economic Trends report. NFIB Chief Economist William Dunkelberg said of the current economic situation, “The Small Business Optimism Index fell a bit more than one point, not much of a response to stock market turbulence or the Federal Reserve’s move to raise interest rates. The decline in optimism was accounted for by two important Index components, expected business conditions in six months and expected real sales.” He cautioned that “overall, it is unlikely that anything will occur that will raise the spirits of small business owners.”

Additional Reading

Reuters also reported on import and export prices.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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