U.S. import, export prices drop again in December
Labor Department says import prices drop 4.2%
By Maria Varmazis -- Purchasing, 1/14/2009 9:39:00 PM
The Bureau of Labor Statistics reported that the U.S. import and export price index both fell in value for the fifth month in a row. The Department of Labor reports that import prices fell by 4.2% while export prices fell by 2.3% in December. Import prices overall declined 9.3% in 2008, the largest decline on record and the first yearly decline since 2001.
Petroleum prices have been a large contributor to the decline in import prices. BLS reports that petroleum import prices declined 47% in 2008. Import prices from China specifically continued a slight decline from November, edging down by 0.4% in December, though still up 3.1% in 2008 overall.
“The pace [of import price declines] is moderating because oil prices are showing tentative signs of stabilizing,” says Ryan Sweet, senior economist at Moody's. "If the price of oil doesn't drop this month, overall import prices will not fall as much." While the decline in import prices may keep inflation at bay, Sweet notes that continuous drops in import prices heighten the risk of deflation in the U.S., adding that "there is growing concern that prices may overshoot to the downside as the U.S. recession intensifies."
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