The BLS has just released its import and export price indexes for May 2007 . Now, this is a release that I never looked at before I did my last story, but now it’s fascinating to me (that probably says something unfortunate about my life).
If I look down the list of year over year import price changes, I see very few negatives. For example, the price of imported consumer goods, outside of automobiles, is up 1.6% over the past year. The import price of automobiles and auto parts is up 0.9%. Doing a quick back of the envelope calculation, that gives me a combined gain of roughly 1.3%.
On the other hand, if we look at the consumer price index, commodities less food and energy are down 0.7% over the same period. The reason is clear…imports are cheaper than the domestic goods that they replace.
But the accounts don’t balance. The cheapness effect is being picked up on the consumer spending side, but not the import side.