WASHINGTON — The cost of goods brought into the United States jumped more than economists anticipated last month, driven by steep increases in fuel and capital goods prices, pushing the annual rate of import price growth to its highest level in nearly four years.
According to the Labor Department’s Bureau of Labor Statistics, import prices rose 1.9% in May, following an upwardly revised 2.0% increase in April. Economists surveyed by Reuters had expected a more modest 1.0% gain. The import price figures do not include tariffs.
Looking at the broader picture, import prices climbed 6.7% over the 12 months ending in May — the steepest year-over-year increase since August 2022, and well above the 4.2% annual gain recorded in April.
A major factor behind the surge has been rising oil prices, which have soared in connection with the U.S.-Israeli war with Iran. Washington and Tehran announced Sunday that they had reached an agreement to end the conflict and reopen the Strait of Hormuz, though that deal may depend on a resolution to ongoing hostilities in Lebanon.
The inflation picture has been worsening on multiple fronts. Consumer prices rose at their fastest pace in three years in May, while producer prices posted their biggest increase in three and a half years, according to government data released last week.
With inflation climbing and the job market holding steady, the likelihood of an interest rate hike from the Federal Reserve has grown. Still, many economists believe the threshold for such a policy tightening remains high.
Federal Reserve officials were set to begin a two-day policy meeting Tuesday. Economists widely expected the central bank to hold its benchmark overnight interest rate steady in the 3.50% to 3.75% range, while signaling a shift away from its previous stance favoring rate cuts.
Imported fuel prices jumped 12.5% in May, following an even larger 18.6% spike in April. The cost of imported capital goods rose 1.3%, with heavy spending on artificial intelligence technology cited as a key driver behind that increase.
