Import prices surged in March and some of the price jumps are a record for modern trading history.  Even the Labor Department’s reputation for under-reporting inflation statistics can’t mask the high inflation.  Oil is only part to blame as non-petroleum costs broke many records.

Overall import prices rose by +2.8% in March, after increasing an unrevised 0.2% in February.  Economists were expecting import prices to be up by +2.1% in March.

But it just goes from bad to worse.  The year over year readings show that since March 2007, import prices have risen by a whopping +14.8%.  Last year’s "year over year" levels showed that prices rose by +2.8%.

Petroleum import prices increased 9.1% last month and fell 1.9% in February, but these same prices soared by about 60.0% since March 2007.

If you take out energy costs, other import prices rose by +1.1% in March and by +5.4% since March 2007.  That year over year reading is nearly twice the level of last year. It looks like the increase in non-petroleum prices is the largest one-month increase since the index was first published monthly in December 1988.

There was a 3.6% hike in industrial supplies and materials prices, tied mostly to prices for unfinished metals.  Imported food, feeds and beverages rose by +2.5%, consumer goods rose by +0.5%, autos rose by +0.2%, and capital goods were unchanged.

The break-down by country is also rather revealing.  Prices from China rose by +0.7% and by +3.2% from Canada. Prices from the European Union prices rose by +1.6% and prices from Japan rose by +0.1%.

The good news is that EXPORT prices are also rising.

The bad news is that this is all inflationary as hell.  At least we aren’t seeing 10% yields on CD’s and 9% or higher on mortgages.

As far as the critics calling for China being unfair with having its peg to the US Dollar…. be careful what you wish for.

Jon C. Ogg
April 11, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at [email protected] and he does not own securities in the companies he covers.

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