U.S. Import Prices Decline 0.6% in August; Export Prices Edge Down 0.1%

U.S. import prices declined 0.6% in August, the U.S. Bureau of Labor Statistics reported today, following a 0.1% decrease the previous month. Falling prices for both fuel and nonfuel imports contributed to the August decline. Prices for U.S. exports edged down 0.1%, after decreasing 0.5% in July.

Imports
Import prices declined 0.6% in August, the largest monthly drop since the index fell 1.3% in January 2016. The August decrease followed a 0.1% decline in July and was only the third monthly drop over the past 12 months. Prices for U.S. imports advanced 3.7% from August 2017 to August 2018 and have not recorded a 12-month decline since October 2016. (See table 1.)

Fuel Imports: Import fuel prices decreased 3.9% in August, the first decline for the index since a 2.6% drop in March and the largest monthly decline since a 6.8% decrease in February 2016. Petroleum prices declined 3.9% in August, after increasing in each of the previous 4 months, and natural gas prices fell 6.3% following an 18.0% increase in July. Despite the downturn in August, fuel prices rose 30.6% over the past 12 months. The price index for petroleum increased 33.0% for the year ended in August, and prices for natural gas decreased 11.7% over the same period.

All Imports Excluding Fuel: Nonfuel import prices edged down 0.1% in August, after decreasing 0.3% in each of the previous 2 months. In August, the decline was driven by falling prices for nonfuel industrial supplies and materials, although lower capital goods prices also contributed. In contrast, the price index for foods, feeds, and beverages advanced in August. Despite the downward trend over the past 3 months, nonfuel import prices increased 0.9% between August 2017 and August 2018. The increase was led by a 6.4% rise in nonfuel industrial supplies and materials prices over the 12-month period.

Nonfuel Industrial Supplies and Materials: The price index for nonfuel industrial supplies and materials fell 0.8% in August following a 1.1% decline the previous month. The August decrease was led by a 1.9% drop in unfinished metals prices and a 2.6% decline in building materials prices.

Finished Goods: Import prices for finished goods categories were mostly unchanged in August. The price index for capital goods edged down 0.1%, after recording no change in July. Prices for consumer goods and automotive vehicles recorded no change in August.

Foods, Feeds, and Beverages: Foods, feeds, and beverages prices advanced 0.4% in August following a 1.6% decline the previous month.

Exports
Prices for U.S. exports decreased 0.1% in August, after declining 0.5% in July. The July downturn was the first monthly drop since June 2017. In August, lower prices for nonagricultural exports more than offset higher agricultural prices. The price index for overall exports advanced 3.6% for the year ended in August and has not recorded a 12-month decline since a 0.2% decrease in November 2016. (See table 2.)

Agricultural Exports: The price index for agricultural exports rose 0.2% in August following a 5.2-percent decline the previous month. In August, higher prices for soybeans, wheat, and corn more than offset lower prices for meat, nuts, and fruit. Agricultural prices decreased 1.7% for the year ended in August, after increasing 1.7% between August 2016 and August 2017. Falling prices for soybeans, fruit, and meat all contributed to the decline over the past 12 months.

All Exports Excluding Agriculture: Nonagricultural export prices fell 0.2% in August, after recording no change in July. The August decrease was led by declining prices for nonagricultural industrial supplies and materials, consumer goods, and automotive vehicles. In contrast, the price index for capital goods advanced in August. Prices for nonagricultural exports increased 4.1% over the past year and have not recorded a 12-month decline since November 2016.

Nonagricultural Industrial Supplies and Materials: Prices for nonagricultural industrial supplies and materials decreased 0.6 percent in August following a 0.2% decline the previous month. The declines in August and July were both driven by lower metals prices. Despite the recent downturn, the index advanced 9.7% for the year ended in August.

Finished Goods: Finished goods prices were mixed in August. The price indexes for consumer goods and automotive vehicles each fell 0.1%. In contrast, capital goods prices advanced 0.2% in August, after ticking up 0.1% in July. The August increase was led by higher prices for electrical generating equipment.

Measures of Import and Export Prices by Locality
Imports by Locality of Origin: The price index for imports from China edged down 0.1% for the second consecutive month in August. Those were the first monthly declines for the index since a 0.3% drop in September 2017. Prices for imports from Japan recorded no change in August following a 0.2% increase in July and a 0.1% decrease in June. Import prices from Japan rose 1.0% over the past year, the largest 12-month advance since the index increased 1.0% between June 2016 and June 2017. The price index for imports from Canada fell 1.5% in August, after recording no change the previous month. The August decline was led by lower petroleum prices. Prices for imports from the European Union and Mexico each decreased 0.1% in August. (See table 7.)

Exports by Locality of Destination: Prices for exports to China edged down 0.1% in August following declines of 2.1% in July and 0.6% in June. Export prices to Japan declined for the third consecutive month in August, falling 0.4%, after decreasing 1.2% in July and 0.3% in June. The price index for exports to the European Union fell 0.2% in August following 0.1% drops in each of the previous 2 months. In August, the decline was led by a 0.2% decrease in manufactured goods prices. In contrast, prices for exports to Canada and Mexico each ticked up 0.1% in August. (See table 8.)

Terms of Trade Indexes: Terms of Trade indexes are based on the country, region, or grouping and measure the change in the purchasing power of exports relative to imports. The U.S. terms of trade index with China recorded no change in August following a 2.0% decline in July and a 0.6% drop in June. Both the July and June decreases were driven by falling export prices to China. The U.S. terms of trade index with Japan decreased 0.4% in August, after declining 1.3% the previous month. The index for U.S. terms of trade with the European Union decreased 0.2% in August, after edging down 0.1% in July. In August, the U.S. terms of trade index with Canada advanced 1.6% and with Mexico rose 0.2%. (See table 9.)

Import and Export Services
Imports: Import air passenger fares declined 8.8% in August, the largest decrease since a 10.6% drop in August 2017. Falling European, Asian, and Latin American/Caribbean fares all contributed to the drop in August 2018. Despite the August decline, import air passenger fares advanced 3.5% over the past year. Prices for import air freight decreased 0.6% in August and increased 3.0% over the past 12 months. (See table 10.)

Exports: The index for export air passenger fares fell 3.7% in August, after increasing 1.6% in July and 5.0% in June. The August downturn was driven by an 11.1% drop in European fares. Export air passenger fares fell 3.3% over the past 12 months, the largest over-the-year decline since a 5.8% drop in December 2017. Export air freight prices decreased 0.6% in August and rose 3.4% over the past year.