US import prices increase; post largest annual gain in more than four years

WASHINGTON: US import prices increased more than expected in September, boosted by higher costs for energy products and a range of other goods, further evidence of rising inflation pressures as the Middle East conflict persists.

The report from the Labour Department on Friday followed data this week showing strong increases in consumer and producer prices last month, which left economists convinced that inflation was broadening beyond the energy sector. The drawn-out US-Israeli war with Iran has snarled supply chains, and is keeping oil prices elevated.

Economists have attributed rising inflation to President Donald Trump’s policies, including tariffs on imports and the Middle East conflict. A Reuters/Ipsos poll also showed about 78 percent of Americans blamed Trump’s policies for the rising cost of living. “Americans face an inflation threat literally on every front and everywhere they turn they have to reach in their pocketbooks and pay a little bit more for the same goods that were cheaper just a few months ago,” said Christopher Rupkey, chief economist at FWDBONDS. “There was no import goods inflation before Trump 2.0 economic policies started to roll out in January 2025, but this year it is everywhere.”

Import prices jumped 1.1 percent last month after rebounding by a downwardly revised 0.5 percent in August, the Labor Department’s Bureau of Labor Statistics said. Economists polled by Reuters had forecast import prices, which exclude tariffs, increasing 0.8 percent after a previously reported 0.7 percent advance in August. In the 12 months through September, import prices rose 8.1 percent, the largest gain since July 2022, after increasing 6.7 percent in August. Despite inflation heating up in September, financial markets still expected the Federal Reserve to skip raising interest rates later this month and tighten monetary policy in December.

The US central bank in September raised its overnight benchmark interest rate by 25 basis points to the 3.75 percent-4.00 percent range. Imported fuel prices rebounded 4.8 percent last month after falling 0.2 percent in August. Food prices were unchanged after dropping 0.6 percent in August. Excluding food and fuels, import prices advanced 0.7 percent, matching the prior month’s increase. The so-called core import prices rose 6.2 percent in the 12 months through September.

Capital goods prices increased 0.9 percent after rising by the same margin in August, boosted by prices for computers, peripherals and semiconductors amid an investment boom. There was also a rise in the cost of imported industrial and service machinery, which more than offset a decline in the prices of scientific and medical machinery.

Prices for imported consumer goods, excluding automotives, increased 0.4 percent, driven by a 0.7 percent surge in the cost of long-lasting manufactured goods. The cost of imported automotive vehicles, parts and engines increased 0.3 percent. Prices of imports from China increased 0.7 percent, the most since December 2021. Prices gained 3.1 percent in the 12 months through September. There were also increases in the prices of imports from Japan, the European Union, Mexico and Canada.

The report also showed a 12.6 percent surge in import air passenger fares last month. The rise, which followed decreases in July and August, could impact economists’ estimates of the Personal Consumption Expenditures price indexes, the inflation measures tracked by the Federal Reserve for its 2 percent target.

Economists’ estimates for the increase in September’s core PCE price index currently range from 0.31 percent to 0.36 percent, which could round up to 0.4 percent. That would translate to a year-over-year rise of 3.1 percent. Core PCE inflation gained 0.2 percent in August and advanced 3.0 percent on a year-over-year basis.