December 28, 2006 (The Editor’s Desk is updated each business day.)

Prices of imported capital goods down again in 2005

Prices for imported capital goods decreased 1.3 percent in 2005, which was larger than the 0.8-percent drop in 2004.

[Chart data—TXT]

The decline in 2005 was led by computers and telecommunications equipment, both of which continued well-established downward trends. Prices for electronic equipment typically fall as products eventually become obsolete and new products are introduced to replace them.

Computer, peripheral, and semiconductor prices, as well as telecommunications equipment prices, declined steadily throughout the year and ended the year down 5.2 and 2.4 percent, respectively. The constant declines in computer prices overall were due to continued weak demand, technological improvements, and price competition; however, demand for laptop and handheld computers remained healthy, though not strong enough to overcome declining prices for other computer products.

Prices for capital goods excluding computers and semiconductors increased for the third consecutive year. The index rose 1.2 percent compared with 2.0 percent in 2004.

These data are from the International Price program. To learn more, see "Import prices rise in 2005 due to continued high energy prices," by Jeffrey Bogen, Monthly Labor Review, November 2006.