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February 2009, Vol. 132, No. 2

William H. Casey and Myron D. Murray

In 2007, imports were most affected by rising energy, chemical, and metals costs, in addition to the devaluation of the dollar. Growing economies such as China and India pushed global demand for oil; demand remained strong throughout the year and pressured prices upward across all sectors of the economy. Import prices increased 10.6 percent in 2007, the sixth consecutive annual increase and the largest year-over-year advance since the measure was first published in 1982. Import prices excluding fuel increased 3.1 percent, the largest increase since 2002, when that measure was first published. The impact of exchange rates on import prices can be seen through the import locality-of-origin indexes. Prices of goods from China increased by 2.4 percent in 2007, the first annual price increase in Chinese goods since the index began to be published in December 2003. Merchandise goods from the European Union, Canada, and Japan all increased in price, with the dollar depreciating against the currency of each of those countries. Rising crude-oil costs were a primary factor in the 35.9-percent rise in prices for goods from Near East Asia and the 15.8-percent increase in prices for goods imported from Mexico.