US Import Prices Continue to Increase

Back in March, import prices in the US rose more than expected, boosted by higher petroleum costs and tight supply chains. Some experts believe this may be early inflation signs as the economy reopens.

The Labor Department’s recent report revealed an increase in both consumer and producer prices in March. The rise in COVID-19 vaccinations and fiscal stimulus has enabled more services businesses to reopen, releasing pent-up demand that is collapsing due to supply constraints.

Many economists, including Federal Reserve Chair Jerome Powell, believe that higher inflation is only temporary, and supply chains will soon adapt and become more efficient.

Kathy Bostjancic, Chief US Financial Economist at Oxford Economics, believes, «soaring commodity prices and strong base effects will continue to boost import prices in the coming months. However, the acceleration in import inflation should be temporary and trend lower in the second half of the year.»

Following a 1.3% increase in February, import prices increased 1.2% in March. The fifth consecutive monthly gain increased the year-on-year increase to 6.9%, which was the highest since 2012.

Import prices, excluding tariffs, were expected to rise by 1.0%, according to economists polled by Reuters.

Imported fuel prices increased 6.3% in March, after an 11.7% increment in the previous month. Petroleum prices increased by 6.7% as well, while imported food saw a 2.0% rise in costs.

Apart from fuel and food, other prices in the import sector shot up 0.8%. However, they had increased by 0.3% in February. The cost of imported goods from China also jumped by 0.4% in March after increasing 1.1% from November to February. Imported capital goods prices increased by 1.8% as well.

Overall, March recorded the largest surge in export prices at 9.1% since September 2011, following a 5.3% rise in February.

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