Cross-border inflation rates continue to show improvement, up 0.4 percent for import prices in December and up 0.3 percent for export prices. The year-on-year rates, at plus 1.8 for imports and plus 1.1 percent for exports, are together in the plus column for the first time since July 2014.
But the gain on the import side is tied to energy prices which surged 7.9 percent in the month. Excluding petroleum, import prices fell 0.2 percent for a year-on-year rate that is no better than flat. One positive factor here, however, may be OPEC's agreement to cut production, which was the cause of December's rise in petroleum prices and looks to support future prices.
Higher petroleum prices are also a factor lifting related readings on the export side though agriculture is the most closely watched factor here. Agricultural prices actually fell 0.3 percent in the month with this year-on-year rate also in the negative column at minus 0.5 percent.
By country, import prices are up the most with Canada and Latin America, both 2.3 percent higher in the month with Canada's year-on-year rate at plus 7.1 percent and Latin America at plus 2.3 percent. Prices with China, the EU, and Japan are flat with China at minus 1.7 percent year-on-year.
Finally emerging from a 2-1/2 year slump that was triggered by the 2014 collapse in oil prices, year-on-year growth in import prices is nearly at the 1.7 percent rate for consumer prices. Increases in import prices, though possibly centered in petroleum, are nevertheless looking to become a positive factor that could help lift overall inflation.
Following OPEC's agreement to cut output, petroleum prices rose in December and are expected to lift import prices which forecasters see rising a sharp 0.7 percent. But strength in the dollar, which makes foreign products cheaper, will work as an offset to oil. Forecasters see a 0.2 percent gain for export prices. Year-on-year trends for both import and export prices have been moving toward zero, ending two years of sharp contraction that was initially triggered by the 2014 collapse in oil prices.