December 1998 U.S. Import and Export Price Indexes

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-DECEMBER 1998-

The U.S. Import Price Index decreased 0.7 percent in December, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The decline followed a 0.5 percent decrease the previous month and was again attributable to a large decline in petroleum prices. Prices for nonpetroleum imports were unchanged in December. Export prices edged down 0.1 percent in December, after increasing 0.2 in November.

Over the past year, import prices fell 6.1 percent after falling 5.2 percent in the December 1996-97 period. The annual decrease was the largest recorded for the import price index since publication of the series began in 1983. The decline in export prices, down 3.5 percent for the year ended in December, was more than double the declines of 1.1 percent and 1.2 percent recorded in the two previous 12-month periods ended in December 1997 and December 1996 respectively. The annual decrease for the December 1997-98 period also was the largest recorded for the export price index since publication of the series began in 1984.

Import Goods

After decreasing 9.9 percent in November, petroleum prices fell 11.9 percent in December, the largest monthly decline for the index since February 1991. Petroleum prices were at the lowest level since publication of the index began in 1983. Over the past year, petroleum prices fell 40.0 percent following a 25.5 percent decline over the December 1996-1997 period. In contrast, the index for nonpetroleum import prices was unchanged in December after posting 0.1 percent increases in each of the previous two months. For the year this index fell 3.1 percent, compared with a 2.8 percent decrease in 1997.

Nonpetroleum import prices were unchanged, on average, in December as gains recorded for the price indexes of motor vehicles and of foods, feeds, and beverages were offset by declining prices for consumer goods and for industrial supplies and materials excluding petroleum. The index for foods, feeds, and beverages rose 1.4 percent last month after decreasing 1.3 percent in November. Despite recording increases in three of the past four months, the index was down 1.7 percent for the year ended in December. The index for automotive vehicles parts and engines rose for the third consecutive month, up 0.1 percent in December after gaining 0.4 percent and 0.2 percent in November and October, respectively. Over the past year, however, the index was unchanged.

In contrast, the indexes for capital goods, consumer goods, and industrial supplies and materials excluding petroleum, which have trended downward over the past three years, were either unchanged or declined in December. The price index for capital goods was unchanged last month after increasing in November, the first upturn in 16 months. For the year ended in December, the index dropped 4.8 percent. After increasing 0.1 percent in November, prices fell last month for both industrial supplies and materials excluding petroleum, down 0.4 percent, and consumer goods, down 0.2 percent. Over the past 12 months, these indexes fell 6.6 percent and 1.2 percent, respectively.

Export Goods

Prices for overall U.S. exports resumed a three-year downward trend in December, as declines for nonagricultural prices more than offset an increase in agricultural prices. The decline in export prices was the sixth in the past seven months. Agricultural prices rose 0.7 percent in December following a 1.7 percent increase in November, as prices continued to move higher for grains and oilseeds. Despite the recent upturn, however, agricultural prices fell 9.3 percent for the year ended in December and have decreased on an annual basis in each of the last three years. In contrast, after recording no change in November, the index for nonagricultural export prices resumed a downward trend, falling 0.2 percent in December. Over the past year and a half, monthly prices for nonagricultural exports have, on average, either decreased or posted no change. Prices for nonagricultural exports were down 2.8 percent for the year ended in December, compared with a 1.0 percent decrease in the prior year.

The indexes for nonagricultural industrial supplies and materials, automotive vehicles, and consumer goods each fell in December after increasing or posting no change in November. Prices for nonagricultural industrial supplies and materials fell 0.3 percent in December and 6.7 percent over the past 12 months, marking the third consecutive annual decline. The index for automotive vehicles, parts, and engines dipped 0.1 percent in December, the first decrease since February 1998. The index increased 0.5 percent for the year ended in December. Prices for consumer goods excluding automotives fell 0.2 percent in December and 0.8 percent over the past 12 months.

The index for capital goods, which has not posted an increase since August 1997, was unchanged in December. For the year, the index decreased 1.9 percent after falling 1.6 percent over the December 1996-97 period.

Summary of December-to-December percent changes

Imports by Locality of Origin

The price index for imports from Japan rose for two consecutive months for the first time since mid-1995, increasing a modest 0.1 percent in December after gaining 1.3 percent in November. Despite the recent gains, prices from Japan fell 3.0 percent over the past year. Prices of imports from the Asian Newly Industrialized Countries were unchanged on average in December. This index had decreased, however, over each of the previous 15 months and was down 8.2 percent for the year ended in December.

In December the import price indexes for Canada and Latin America decreased for the second consecutive month after both increased 0.4 percent in October. Import prices from Latin America were down 1.7 percent in December and 9.9 percent over the past 12 months. Canadian import prices decreased 0.8 percent last month and 3.5 percent for the year. In addition, the index for imports from the European Union also was down last month, falling 0.7 percent, the first decline in this index since July. Over the past 12 months, the index was down 0.7 percent.

Import and Export Services

The import air freight index increased 8.0 percent from September to December after a third quarter decrease of 1.5 percent. For the year ended in December, the index edged up 0.1 percent. The export air freight index also was up over the past three months, increasing 1.2 percent for the second consecutive quarter. Over the past 12 months, this index rose 3.6 percent.

The import air passenger index dropped 6.8 percent from September to December. For the year ended in December, however, the index gained 0.8 percent as gains posted in the second and third quarters countered the recent decline. In contrast, export air passenger fares continued to increase, rising 2.7 percent in the fourth quarter. Over the past year, this index rose 6.4 percent.

The import ocean liner freight index decreased 0.6 percent over the past three months after increasing in the previous two quarters. The index rose 7.6 percent over the past 12 months.