May 2005 U.S. Import and Export Price Indexes

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- MAY 2005 -

The U.S. Import Price Index decreased 1.3 percent in May, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The decline followed four consecutive increases, as decreases in both petroleum prices and nonpetroleum prices contributed to the May drop. Prices for U.S. exports also declined in May, decreasing 0.1 percent for the month.

Import Goods

A downturn in petroleum prices, which fell 6.5 percent in May, contributed to the turnaround in overall import prices. Prices for import petroleum had risen 28.2 percent over the previous four months, which led a 4.9 percent increase in import prices over that period. In addition, nonpetroleum import prices declined for the first time since October, decreasing 0.3 percent in May. The drop was only the second monthly decline for the index over the past year and was the largest decrease since August 2003. However, both nonpetroleum prices and overall import prices remained up over the past 12 months, rising 2.5 percent and 5.7 percent, respectively.

The turnaround in nonpetroleum prices was largely attributable to a 1.5 percent decrease in the price index for nonpetroleum industrial supplies and materials. The decline in that index was the largest since April 2003 and was driven by lower prices for natural gas, building materials, and metals. Notwithstanding the May decrease, nonpetroleum industrial supplies and materials prices increased 7.8 percent over the past 12 months. Automotive vehicles prices also declined in May, edging down 0.1 percent. The decrease was the first monthly dip for the index since September 2003 as prices for automotive vehicles rose 1.3 percent over the past year.

In contrast, the price indexes for consumer goods and for foods, feeds, and beverages increased in May, rising 0.1 percent and 0.3 percent, respectively. Consumer goods prices were up 1.4 percent for the year ended in May. Higher meat and vegetable prices led the price index for foods, feeds, and beverages up for the fourth month in a row. Prices for foods, feeds, and beverage increased 8.2 percent over the past year.

Capital good prices were unchanged in May after a modest 0.1 percent increase the month before. The index declined 0.3 percent for the May 2004- 2005 period.

Export Goods

Export prices decreased 0.1 percent in May, as falling nonagricultural prices more than offset an increase in the price index for agricultural exports. The 2.0 percent May increase in agricultural prices was the third consecutive monthly advance, but the index was down 8.2 percent over the past year. Nonagricultural prices decreased 0.4 percent in May, the first monthly drop for the index since June 2004, and the largest decline since November 2001. Despite the May decreases, for the year ended last month, nonagricultural prices increased 3.9 percent and overall export prices rose 2.7 percent.

A turnaround in nonagricultural industrial supplies and materials prices was the primary factor in the decline in nonagricultural prices. The price index for nonagricultural industrial supplies and materials decreased 1.1 percent in May, led by lower prices for fuel, metals, and plastic. The May decline was the largest for the index since December 2001, but nonagricultural industrial supplies and materials prices still increased 12.3 percent over the past 12 months.

In contrast, each of the major finished goods areas either recorded a modest increase or was unchanged in May. Automotive vehicles prices ticked up 0.1 percent for the month and were up 1.1 percent for the year ended in May. Prices for capital goods and for consumer goods were each unchanged in May. Over the past year, capital goods prices were up 0.3 percent and consumer goods prices rose 1.5 percent.

Imports by Locality of Origin

Import prices from the European Union decreased 0.3 percent in May, as both lower petroleum prices and the rise in the value of the dollar against the Euro contributed to the decline. The decrease was the first for the index since September 2003. Despite the decline, import prices from the European Union increased 5.5 percent for the year ended in May.

Lower petroleum prices were also a factor in the downturn in the price indexes of imports from Canada and from Mexico. Prices of imports from Canada decreased 1.5 percent in May after having increased 5.3 percent over the previous four months. May prices of imports from Mexico declined 0.5 percent. Over the past 12 months, import prices from Canada and from Mexico were up 8.3 percent and 6.4 percent, respectively.

In contrast, prices of imports from China rose 0.1 percent in May while import prices from Japan were unchanged. Import prices from China increased for the third time in four months, but were still down 0.4 percent for the year ended in May. Prices of imports from Japan have not recorded a decline since September and increased 0.9 percent over the past 12 months.

Import and Export Services

Import air passenger fares declined 0.6 percent in May following a 6.3 percent jump in April. The decline was driven by a 2.5 percent drop in Latin American and Caribbean fares, which offset increases to both European fares and Asian fares. Despite the May downturn, the price index for overall import air passenger fares increased 3.6 percent over the past 12 months.

In contrast, export air passenger fares increased 6.8 percent in May after falling 2.1 percent the month before. Higher fares from each of the major routes contributed to the increase. Overall export air passenger fares rose 15.5 percent for the year ended in May.