Merk Investments: Import Prices June 2008
Import prices rose 2.6% m/m and 20.5% y/y for the month of June on the back of a 7.4% rise in the cost of petroleum. Ex-petroleum prices advanced 0.9% m/m and 7.3% y/y. Ex-fuels costs rose 0.8% m/m and 6.6% y/y. Imports of food and beverages climbed 1.9%, industrial supplies advanced 5.8% and consumer goods increased 0.2% for the month. The rise in the cost of oil during the month was the primary catalyst for the 3.4% rise in the cost of imported goods from Canada. Goods imported from China increased 0.6% m/m and 4.8% y/y.
The year over year increase in the headline was the largest single jump in the index since 1982. Of particular note, is the continued rise in the importation of inflation via the trade channel from China. Since we do not import oil from the middle kingdom, it cannot be explained away as a “temporary” phenomenon or dismissed as “transitory.” We have a real problem with inflation and the risk that we will soon see a greater pass through to core prices in the domestic context is growing. This data will provide little comfort to the Fed or the market that is facing a significant problem with inflation that looks to be growing in intensity at precisely the same time the market looks poised to capitulate in the face of Federal Government placing Fannie Mae and Freddie Mac into conservatorship.
Joseph Brusuelas
Merk Investments
Chief Economist/VP Global Strategy
|
