December 2006 U.S. Import and Export Price Indexes

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- DECEMBER 2006 -

The U.S. Import Price Index increased 1.1 percent in December, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The advance followed a 0.5 percent rise in November and was led by a 4.8 percent upturn in petroleum prices. Export prices rose 0.7 percent in December, after increasing 0.4 percent the previous month.

Import Goods

Import prices rose for the second consecutive month in December and the 1.1 percent increase was the largest monthly advance since May. The price index for overall imports also increased for the fifth straight year in 2006, advancing 2.5 percent after more substantial increases of 8.0 percent and 6.7 percent in 2005 and 2004, respectively.

A 4.8 percent increase in petroleum prices was the largest contributor to the overall December rise. Petroleum prices resumed their upward trend after declining 21.5 percent for the three-month period ended in November. The index rose 6.2 percent overall in 2006, the fifth consecutive year the index advanced, but the smallest annual increase over that period.

Nonpetroleum prices increased 0.4 percent in December after a 0.9 percent advance the previous month. Prices for nonpetroleum imports rose 1.7 percent over the past 12 months after advancing 2.4 percent and 3.7 percent in 2005 and 2004, respectively. The December increase in nonpetroleum prices was driven by a 1.5 percent rise in nonpetroleum industrial supplies and materials prices. That advance in turn was led by higher prices for natural gas, up for the second consecutive month, metals and chemicals prices. The price index for nonpetroleum industrial supplies and materials increased 4.5 percent over the past year.

The price indexes for consumer goods, capital goods, and foods, feeds, and beverages also contributed to the higher prices for nonpetroleum imports in December. Consumer goods prices rose 0.2 percent in December and 1.2 percent for the year ended in December. Prices for capital goods edged up 0.1 percent after remaining unchanged over the previous four months. Overall, the index increased a modest 0.4 percent in 2006. Foods, feeds, and beverages prices rose 0.6 percent for the month and 4.1 percent for the December 2005- 2006 period.

In contrast, prices for automotive vehicles decreased 0.1 percent in December, the first downturn for the index since a 0.2 percent drop in January. Despite the December decline, automotive vehicle prices rose 0.6 percent over the past 12 months.

Export Goods

Export prices increased 0.7 percent in December as higher prices for both agricultural and nonagricultural exports contributed to the rise. The advance in the prices for overall exports followed a 0.4 percent rise in November and was the largest monthly gain since a similar 0.7 percent increase in June. Prices for overall exports rose 4.6 percent in 2006, the largest annual increase for the index since a 6.2 percent jump in 1988. The 2006 rise followed a 2.8 percent advance the previous year.

Both the December and annual increases in overall export prices were partly driven by higher prices for agricultural exports, which rose 2.2 percent in December, led primarily by higher corn prices. The price index for export corn increased 5.2 percent in December after a 20.7 percent jump in November. For the year ended in December, agricultural prices rose 13.2 percent compared to a 4.9 percent increase in 2005.

Nonagricultural prices also increased in December, rising 0.5 percent. The index rose 3.8 percent over the past 12 months. A 1.6 percent advance in nonagricultural industrial supplies and materials prices led the December increase. Higher prices for fuels, metals, and selected building materials all contributed to that advance. For the year ended in December, nonagricultural industrial supplies and materials prices rose 9.8 percent.

Prices for each of the major finished goods areas also increased in December. Capital goods prices ticked up 0.1 percent, the fourth consecutive monthly advance. The index rose 1.2 percent over the past 12 months. Automotive vehicle prices increased 0.3 percent, the largest one-month advance since October 2005. Prices for automotive vehicles rose 1.5 percent for the year ended in December. The price index for consumer goods advanced 0.1 percent for the month and 2.1 percent over 2006.

Summary of December-to-December Percent Changes

Imports by Locality of Origin

Import prices from Canada increased 1.6 percent in December after a 3.3 percent advance in November. Both increases resulted mostly from higher fuel prices and followed declines of 4.5 percent and 2.3 percent in October and September, respectively. Despite the recent increases, prices of imports from Canada only rose a modest 0.3 percent for the December 2005-2006 period.

Prices of imports from the European Union and Mexico also rose in December, increasing 0.4 percent and 0.2 percent, respectively. Higher petroleum prices contributed to those increases. Import prices from the European Union increased 5.7 percent in 2006, while the price index of imports from Mexico rose 5.2 percent over the same period.

Import prices from China and from Japan each increased 0.1 percent in December, and both indexes declined 1.1 percent for the year ended in December. The December increase in prices from China was the first in four months. The index has not recorded an advance larger than 0.1 percent since October 2005. Import prices from Japan rose for the first time since June.

Import and Export Services

Import air passenger fares rose 3.3 percent in December after declining in each of the four previous months. In December the increase was led by an 18.1 percent jump in Asian fares. Overall, in 2006, import air passenger fares increased 7.8 percent. Export air passenger fares also reversed a recent downturn in December, rising 0.9 percent. The index rose 7.0 percent over the past year.

Prices for import air freight increased 0.9 percent in December following a 2.3 percent decrease the previous month. Higher air freight prices from both Europe and Asia, up 1.8 percent and 0.5 percent, respectively, contributed to the increase. Overall import air freight prices rose 1.7 percent for the year ended in December. The price index for export air freight ticked up 0.1 percent in December and rose 4.2 percent over the past 12 months.